Car Loan EMI Calculator
Enter the on-road price, what you are putting down, the rate and the tenure to see the monthly instalment, the interest, and what the car actually ends up costing you.
Car and loan details
Your instalment
Monthly EMI
for —
- Loan amount —
- Down payment —
- Total interest —
- Total cost of the car —
What this calculator assumes
- Interest is charged on a monthly reducing balance at a fixed rate for the whole tenure, which is how most Indian car loans are written.
- The down payment is paid from your own money on the day of purchase, and the loan is the on-road price minus that down payment. If your lender sanctions against the ex-showroom price instead, your real down payment will be larger — enter the sanctioned amount plus your cash outgo rather than the advertised percentage.
- Processing fees, documentation charges, hypothecation charges and GST on them are not included, and neither is anything the dealer bundles in.
- “Total cost of the car” means the on-road price plus the interest. Fuel, insurance renewals, servicing and depreciation are outside it.
- The first instalment falls one month after disbursal.
How a car loan EMI is worked out
A car loan is an ordinary reducing-balance loan, so the instalment comes from the same formula every regulated Indian lender uses:
EMI = P × r × (1 + r)n ÷ ((1 + r)n − 1)
P is the amount borrowed, n the number of monthly instalments, and r the monthly rate — the annual rate divided by twelve and by a hundred. Interest each month is charged only on what is still outstanding, so the interest portion of the instalment shrinks as the loan runs down.
Take a car with an on-road price of ₹12,00,000 and a down payment of ₹2,50,000. You borrow ₹9,50,000. At 9.5% over five years the instalment is about ₹19,950, you repay roughly ₹11,97,100 in all, and ₹2,47,100 of that is interest. The car that was priced at ₹12 lakh has cost you about ₹14.47 lakh by the time the hypothecation is lifted. That last figure is the one worth internalising, because it is the number nobody at the dealership will quote.
Ex-showroom, on-road, and the down payment nobody quotes
The ex-showroom price is the manufacturer's price for the vehicle. The on-road price is what you actually pay: ex-showroom plus registration and road tax levied by your state, plus the compulsory motor insurance, plus anything the dealer has attached — extended warranty, service package, accessories, fastag, handling. The gap between the two is not small, and road tax in particular varies enough between states that the same model can cost noticeably more in one state than in its neighbour.
Here is the mechanic a generic calculator gets wrong. Lenders overwhelmingly apply their loan-to-value ratio to the ex-showroom price, not the on-road price — and they fund only a part of it. So an advertised offer to finance most of the car's value is measured against the smaller of the two numbers, and everything between the sanctioned amount and the invoice comes out of your pocket on the day. Buyers who budget a down payment as a percentage of the on-road price routinely find themselves several tens of thousands short at delivery. Before you book, ask the lender in writing for two figures: the sanctioned amount in rupees, and the price it was calculated on.
The flat rate trap
Dealer finance desks and some NBFCs quote a flat rate, and it sounds wonderful next to a bank's reducing-balance rate. A flat rate charges interest on the full original amount for every month of the tenure, whether or not you still owe it.
The arithmetic is worth doing once. Borrow ₹8,00,000 at “5% flat” over five years. Interest is 5% of ₹8,00,000 for each of the five years, so ₹40,000 × 5 = ₹2,00,000. Add the principal and you repay ₹10,00,000, which over sixty instalments is ₹16,667 a month. Now ask what reducing-balance rate produces the same instalment on the same loan: about 9.2%. The “5%” offer is a 9.2% loan. As a working rule, across the three-to-seven-year tenures car loans are written for, the reducing-balance equivalent lands a little under twice the flat rate — so doubling a flat quote gives you a slightly pessimistic but usable comparison. The multiple only collapses on very short tenures, where there is not enough repaid balance for the flat basis to overcharge you on.
You cannot compare a flat quote and a reducing quote by looking at the percentages, so do not try. Ask every lender for the instalment and the total amount repayable in rupees, and compare those. If a finance desk will not put the total repayable in writing, that is the answer.
A depreciating asset on a long loan
A home loan is secured against something that generally holds or gains value. A car loan is secured against something that starts losing value the moment it is registered, and loses it fastest in the early years — exactly the years when your loan balance is coming down slowest, because the early instalments are mostly interest.
That combination produces negative equity: a period during which you owe the lender more than you could sell the car for. If the car is written off in an accident, the insurer pays its assessed value, not your outstanding balance, and you are left repaying the difference on a car you no longer have. The longer the tenure, the longer that window stays open. Expand the year-by-year schedule above, look at the closing balance at the end of year two or three, and compare it with what a dealer would actually offer you for the car at that point. If the balance is higher, you are in that window.
What gets financed along with the car
Insurance, extended warranty and accessories are frequently rolled into the loan, which feels painless because nothing leaves your account today. What it means is that you finance them at the loan's interest rate for the loan's full tenure. Add ₹40,000 of bundled insurance and accessories to a 9.5% five-year loan and you repay about ₹50,400 for it — roughly ₹10,400 of interest, part of it charged on cover that will have expired and been renewed more than once before the loan ends.
The renewals, incidentally, come out of your income in cash. Whatever cover the dealer bundles at purchase runs out well before a five- or seven-year loan does, and every renewal after that is a fresh bill that the EMI does not cover. Buy the cover at purchase wherever it is cheapest and pay for it separately if you can; there is no requirement to buy it from the dealer, though there will be pressure to.
Choosing a tenure, and the honest answer
Stretching the tenure is the standard tool for making an unaffordable car look affordable. On the ₹9,50,000 loan above at 9.5%, going from five years to seven cuts the instalment by about ₹4,400 a month — and raises the interest from ₹2,47,100 to ₹3,54,300, an extra ₹1.07 lakh. Going the other way, three years costs ₹30,430 a month but only ₹1,45,500 in interest. The instalment is the number you feel; the interest is the number you pay.
Pick the shortest tenure whose instalment you could still service in a bad month — one with a medical bill or a gap in income — rather than the one that just fits in a good month. A useful test: if the only tenure that works is the longest one on offer, the loan is not too short, the car is too expensive.
Which is the part worth saying plainly. There is no clever financing structure that makes an expensive car cheap. Rate shopping might save you a few tens of thousands over five years; choosing a car one segment down saves several lakh, immediately, and keeps saving through lower insurance, lower road tax and lower running costs. The cheapest car loan available to anyone is a smaller car.
Common questions
Why is my sanctioned loan smaller than the price of the car?
Because lenders normally sanction against the ex-showroom price and fund only a part of it, while the price you pay is the on-road price — ex-showroom plus registration, road tax, insurance and whatever the dealer has added. The gap between the sanction and the on-road price is your real down payment, and it is almost always larger than the figure quoted in the advertisement. Ask the lender in writing which price the loan-to-value ratio is applied to before you book the car.
A dealer quoted me a much lower rate than my bank. Is it real?
Check whether it is a flat rate. A flat rate charges interest on the full original amount for every month of the tenure, even after you have repaid most of it. On ₹8 lakh over five years, 5% flat means ₹2 lakh of interest and an instalment of ₹16,667 — the same instalment a reducing-balance loan at about 9.2% would produce. Ask for the instalment and the total amount repayable in rupees, then put those into this calculator. Rupees cannot be dressed up; percentages can.
Should I make the largest down payment I can?
Usually, but not to the point of emptying your emergency fund. Every rupee of down payment removes a rupee of principal and all the interest it would have carried, and it also reduces the risk of owing more than the car is worth. What it must not do is leave you borrowing on a credit card at revolving rates three months later because the buffer is gone. Fund the down payment from savings you were not going to need, keep six months of expenses aside, then put the rest in.
Can I prepay a car loan without a penalty?
It depends on the rate type, so check the sanction letter for that first. Floating-rate loans taken by an individual for a non-business purpose cannot carry a foreclosure or prepayment penalty — that is an RBI rule, not a concession. If your loan is written at a fixed rate, that protection does not apply: a foreclosure charge is permitted, and there is often a lock-in of several instalments before prepayment is allowed at all. Read the rate type and the foreclosure clause before you sign, not when you want out.
Does this calculator tell me what the car will cost to own?
No. It gives you the cost of buying the car with borrowed money: the down payment, the principal and the interest. Fuel, annual insurance renewals, servicing, tyres, parking and the value the car loses each year are all outside it, and over a five-year hold they routinely exceed the interest. Treat the total here as the floor of what the car costs you, not the ceiling.
Sources
Rates and rules on this page were read directly from the following sources on the dates shown. Figures change — if you are about to act on one, confirm it at the source.