Car Loan EMI Calculator
Work out the monthly EMI on a car loan and what the car will cost you in total. Enter the on-road price, your down payment, the rate you have been offered and the tenure.
Borrowing ₹8.00 lakh at 9% for 5 years costs ₹16,607 a month. With the ₹2,00,000 down payment, the car costs you ₹11,96,401 in all, of which ₹1,96,401 is interest.
Uses the reducing-balance method that banks use. Processing fees and any add-ons financed with the loan are not included.
Year-by-year repayment
| Year | Principal paid | Interest paid | Balance left |
|---|---|---|---|
| 1 | ₹1,32,664 | ₹66,616 | ₹6,67,336 |
| 2 | ₹1,45,109 | ₹54,171 | ₹5,22,227 |
| 3 | ₹1,58,721 | ₹40,559 | ₹3,63,506 |
| 4 | ₹1,73,610 | ₹25,670 | ₹1,89,896 |
| 5 | ₹1,89,896 | ₹9,384 | ₹0 |
How a car loan works
A car loan pays for part of the car’s on-road price: the ex-showroom price plus road tax (RTO registration), insurance and any accessories. You pay the rest as a down payment and repay the loan in equal monthly instalments (EMIs). The car is hypothecated to the lender, which means it is recorded as security on the registration certificate until the loan is repaid.
How the EMI is calculated
EMI = P × r × (1 + r)n ÷ ((1 + r)n − 1)
- P = loan amount = on-road price − down payment
- r = monthly interest rate = annual rate ÷ 12 ÷ 100
- n = tenure in months
Worked example
A car with an on-road price of ₹10,00,000, a ₹2,00,000 down payment, and the rest borrowed at 9% for 5 years:
- Loan P = ₹8,00,000, r = 9 ÷ 12 ÷ 100 = 0.0075, n = 60
- EMI = ₹16,607; in the first EMI, ₹6,000 is interest and ₹10,607 repays the loan
- Total of EMIs = ₹9,96,401, so total interest = ₹1,96,401
- Total cost of the car = ₹2,00,000 + ₹9,96,401 = ₹11,96,401
How tenure and rate change the cost
| ₹8 lakh loan | EMI | Total interest |
|---|---|---|
| 9% for 3 years | ₹25,440 | ₹1,15,832 |
| 9% for 5 years | ₹16,607 | ₹1,96,401 |
| 9% for 7 years | ₹12,871 | ₹2,81,186 |
| 12% for 5 years (typical used-car rate) | ₹17,796 | ₹2,67,733 |
Cars lose value fast, often 15% to 20% in the first year, so a long tenure with a small down payment can leave you owing more than the car is worth. A common guideline is to keep the tenure to 5 years or less.
What goes into the on-road price
- Ex-showroom price, which includes GST. Since GST 2.0 (22 September 2025), small cars (petrol up to 1,200cc or diesel up to 1,500cc, and up to 4 metres long) are taxed at 18%, larger cars and SUVs at 40%, and electric cars at 5%, with no compensation cess on top.
- Road tax and registration, set by your state and usually a percentage of the price.
- Insurance for the first year (third-party cover is compulsory), plus any accessories or extended warranty.
Ask the dealer for an itemised on-road quote and enter that total in the calculator.
When to use a different calculator
- Planning to pay off the loan early? Use the Prepayment Calculator.
- Comparing a dealer offer with a bank offer? Use the Loan Comparison Calculator.
- Considering a personal loan instead? Read Car loan vs personal loan.
