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Car loan EMI calculator

  

Reducing-balance EMI with a one-time processing fee. Insurance, road tax and accessories are not included, so add them to the price if you are financing them.

12 lakh

%
%
years
%

Charged on the loan amount.

Monthly EMI

₹20,162

On a loan of ₹9,60,000. You pay ₹2,49,707 in interest, so the car really costs ₹14,59,307.

Down payment
₹2,40,000
Total interest
₹2,49,707
Processing fee
₹9,600

Choosing a car loan tenure without overpaying

Dealers like to talk about the EMI because it is the number that fits in a budget. The better number to ask for is the total interest. A longer tenure shrinks the EMI and swells the interest, sometimes by a lot.

Take a ₹12 lakh car with a 20% down payment, leaving a loan of ₹9.6 lakh at 9.5%. Over 3 years the EMI is about ₹30,750 and the interest roughly ₹1.5 lakh. Over 5 years it is ₹20,160 and ₹2.5 lakh. Over 7 years it is ₹15,720 and ₹3.6 lakh. Stretching from 3 to 7 years cuts the EMI by about ₹15,000 a month but costs you another ₹2.1 lakh.

A good rule is to keep the EMI under 15% of your monthly take-home pay and the tenure to five years or less. The chart under the calculator compares tenures for your own loan so you can see where the saving stops being worth the squeeze.

Also look at the extras: processing fee, insurance bundled into the loan, and whether the rate is reducing balance. Ask the lender for the annual percentage rate in writing and compare two or three before you decide.

Sources

What this calculator does not account for

  • Insurance, road tax and accessories financed with the loan.
  • Flat-rate loans, which cost more than this reducing-balance EMI.
  • Prepayment or foreclosure charges.

How this is calculated

Formula: EMI

EMI =P × r × (1 + r)^n ÷ ((1 + r)^n − 1)

What the symbols mean

  • PLoan amount: price minus down payment.
  • rMonthly interest rate, annual rate ÷ 12.
  • nNumber of monthly instalments.

Good to know

  • Total interest is EMI × n − P. Ask whether your quote is a reducing-balance or a flat rate; flat rates are higher than they look.
  • For a home loan use the loan EMI calculator.

Read the full methodologyFound an error? Contact us

Worked examples

Each example is worked out by the same code as the calculator above.

₹9.6 lakh at 9.5%

3 years: EMI ₹30,750. 5 years: EMI ₹20,160. 7 years: EMI ₹15,720. Total interest rises from about ₹1.5 lakh to ₹2.5 lakh to ₹3.6 lakh.

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Questions

What is a good down payment for a car?

Banks usually lend up to 85 to 90% of the on-road price. A 20% down payment keeps the EMI lower and the loan smaller than the car's value as it depreciates.

Is a 7-year car loan a bad idea?

The EMI is smaller, but the interest is much higher, and cars lose value faster than a loan clears. Five years is a common cap.

What is a flat interest rate?

A flat rate charges interest on the original loan for the whole term. It looks like 7% but behaves like 12 to 13% reducing balance.

Can I prepay a car loan?

Often yes, but many lenders charge 2 to 5% on the outstanding amount. Ask before you sign.