About the Car Loan EMI
A car loan finances part of the on-road price of a vehicle, and you pay the rest as a down payment. This car loan EMI calculator starts with the on-road price and your down payment, works out the loan amount, and shows the monthly EMI, the total interest and the total cost of the car once the loan is fully repaid.
Car buyers use it to find a comfortable mix of down payment and tenure before visiting the showroom, and to compare finance offers from banks, NBFCs and dealer tie-ups. It is equally useful for a business buying a delivery vehicle or a car for official use, where the EMI has to be covered by the income the vehicle helps to generate.
The EMI depends on the amount borrowed, the interest rate and the tenure. A larger down payment reduces both the EMI and the total interest. Car loans commonly run for up to seven years, but a car loses value every year, so a very long tenure can leave you owing more than the vehicle is worth. Check that the rate quoted is a reducing-balance rate and not a flat rate.
How to use it
- 1Enter the on-road price of the car, including registration, road tax and insurance.
- 2Enter the down payment you will make from your own funds.
- 3Enter the interest rate and the loan tenure in years.
- 4Read the loan amount, EMI and total interest, and check the total cost of the car.
How this is calculated
Loan amount L = On-road price − Down payment EMI = L × r × (1 + r)^n ÷ [(1 + r)^n − 1] r = annual rate ÷ 12 ÷ 100, n = number of months. Total interest = EMI × n − L. Total cost of the car = Down payment + EMI × n.
Frequently asked questions
What is the on-road price of a car?
It is the full amount you pay to drive the car away: the ex-showroom price plus registration and road tax, insurance, and other charges such as handling, FASTag or extended warranty. Road tax varies by state, so the same model has different on-road prices in different cities.
How much down payment should I make on a car?
Lenders finance a large part of the price, and some offers cover the full ex-showroom or on-road price for eligible borrowers. A higher down payment lowers the EMI and the total interest, and reduces the risk of owing more than the car's resale value. Many buyers aim to pay at least a fifth of the price upfront.
What is the ideal tenure for a car loan?
Shorter is cheaper. Tenures of three to five years keep the total interest reasonable and mean the loan ends while the car still has good resale value. A longer tenure lowers the EMI, but you pay more interest, and the outstanding loan can exceed what the car is worth if you sell early.
Is the car loan interest rate flat or reducing?
Banks normally quote a reducing-balance rate, which this calculator uses. Some dealer or finance offers are quoted at a flat rate, which looks lower but costs much more because interest is charged on the full amount for the whole tenure. Always ask for the reducing-balance rate or the annual percentage rate.
Can a business claim tax benefits on a car loan?
When a vehicle is owned and used for business or profession, the interest on the loan and depreciation on the vehicle can generally be claimed as business expenses, subject to the tax rules and to any personal use. Salaried individuals buying a car for personal use get no such deduction. Confirm the treatment with your chartered accountant.