A car loan makes it easy to drive home a new car today, but a car loses value every year while you keep paying interest on it. This calculator shows the EMI, the total interest and how quickly the loan comes down, so you can choose a loan that fits your budget.
How to use the car loan EMI calculator
- Enter the loan amount: the on-road price minus your down payment.
- Enter the interest rate. Used car loans usually cost more than new car loans.
- Choose the tenure, up to 7 years.
Example
A ₹8,00,000 car loan at 9% for 5 years:
- Monthly EMI = ₹16,607
- Total interest = ₹1,96,401
- Total payment = ₹9,96,401
How tenure changes a car loan
₹8 lakh at 9%:
| Tenure | Monthly EMI | Total interest |
|---|---|---|
| 3 years | ₹25,440 | ₹1,15,832 |
| 4 years | ₹19,908 | ₹1,55,586 |
| 5 years | ₹16,607 | ₹1,96,401 |
| 7 years | ₹12,871 | ₹2,81,186 |
A 7-year loan lowers the EMI, but you pay about ₹1.65 lakh more interest than on a 3-year loan, on a car that will be worth much less by then.
The 20/4/10 rule
A simple guide many people use when buying a car:
- 20% down payment at least.
- 4 years of loan at most.
- 10% of your monthly income at most for the EMI, fuel and insurance together.
For example, for a ₹10 lakh car: pay ₹2 lakh down and borrow ₹8 lakh for 4 years, an EMI of ₹19,908. By this rule, that suits a monthly income of about ₹2 lakh or more.
Tips
- Compare the on-road price, including insurance, registration and accessories, not just the showroom price.
- Check prepayment charges. Many car loans are fixed-rate and may charge a fee for early closure.
- Add running costs. Use the fuel cost calculator to estimate fuel every month.
FAQ
What is the EMI for an ₹8 lakh car loan?
At 9% for 5 years, the EMI is ₹16,607. Over 4 years it is ₹19,908, and over 7 years ₹12,871.
What is a good tenure for a car loan?
Shorter is better. Many advisers suggest 4 years or less, because the car loses value quickly and long loans cost much more interest.
Are used car loans more expensive?
Usually yes. Lenders charge higher rates and give shorter tenures on used cars.
Can I prepay my car loan?
Yes, but fixed-rate car loans may carry a prepayment fee. Check your loan agreement, and see how much you could save with the loan prepayment calculator.