Buying a car is one of the biggest financial decisions for Indian families. With prices from ₹5 lakh to ₹50+ lakh, most buyers use car loans. The EMI depends on loan amount, interest rate, and tenure.
This guide explains car loan EMI calculation, compares rates from top banks, and helps you decide the right down payment and tenure.
Calculate Your Car Loan EMI
Enter car price, down payment, rate, tenure to see monthly EMI.
How Car Loan EMI Is Calculated
Car loans use the reducing balance method:
EMI = P × r × (1+r)^n / ((1+r)^n - 1)
Example
Car: ₹10L | Down payment: ₹2L | Loan: ₹8L | Rate: 8.5% | 5 years
- EMI = ₹16,378
- Total payment = ₹9,82,680
- Total interest = ₹1,82,680
Car Loan Interest Rates — Bank Comparison (2026)
| Bank | New Car | Used Car | Max Tenure | Processing Fee |
|---|---|---|---|---|
| SBI | 8.25–9.15% | 9.50–11.00% | 7 years | ₹1,000–5,000 |
| HDFC Bank | 8.50–9.50% | 10.00–12.50% | 7 years | ₹3,000–5,000 |
| ICICI Bank | 8.50–9.25% | 10.50–13.00% | 7 years | ₹2,500–5,000 |
| Axis Bank | 8.60–10.00% | 11.00–14.00% | 5 years | ₹3,500 |
| Bank of Baroda | 8.20–9.00% | 9.75–11.50% | 7 years | ₹1,000 |
Tip: SBI and Bank of Baroda offer the lowest rates.
How Much Down Payment Should You Pay?
| Down Payment | Loan | EMI (8.5%, 5yr) | Total Interest |
|---|---|---|---|
| 10% (₹1L) | ₹9L | ₹18,425 | ₹2,05,515 |
| 20% (₹2L) | ₹8L | ₹16,378 | ₹1,82,680 |
| 30% (₹3L) | ₹7L | ₹14,331 | ₹1,59,845 |
| 50% (₹5L) | ₹5L | ₹10,236 | ₹1,14,175 |
Rule: Pay at least 20% down payment.
True Cost of Car Ownership Beyond EMI
A ₹10L car costs ₹16–18L over 5 years:
| Component | Amount | Frequency |
|---|---|---|
| RTO Registration | ₹50,000–1,20,000 | One-time |
| Insurance | ₹25,000–40,000 | Annual |
| Loan Interest | ₹1,82,680 | Over tenure |
| Fuel (10K km/yr) | ₹70,000–1,00,000 | Annual |
| Maintenance | ₹10,000–15,000 | Annual |
Should You Prepay Your Car Loan?
Yes. No prepayment penalty for floating rate loans (RBI mandate). Prepay ₹1L after 1 year → saves ₹35,000 interest, closes 8 months early.
Strategy: Use annual bonus for prepayment. Each year of delay reduces the benefit.
How to Use the Tool (Step by Step)
- 1
Enter car details
Input car price and down payment.
- 2
Set loan parameters
Enter interest rate and tenure.
- 3
Compare scenarios
Try different down payments and tenures.
Frequently Asked Questions
Minimum down payment for car loan?+−
Banks require 10-20% of on-road price. SBI/HDFC finance up to 90% for new cars. Used cars: 70-80%.
3-year or 5-year car loan?+−
3-year: higher EMI but saves interest. ₹8L at 8.5%: 3yr interest ₹1.08L vs 5yr ₹1.83L.
Car loan with low CIBIL score?+−
Most banks need 700+. NBFCs like Bajaj Finance accept 650+. Below 600: improve score first.
Is car loan interest tax deductible?+−
Not for personal use. Self-employed can claim as business expense. No Section 80C benefit.
Cash or loan for car?+−
If investments earn 12%+ and loan is 8.5%, loan may be smarter. The 3.5% difference works in your favor.
Calculate Your Car Loan EMI
Enter car price, down payment, rate, tenure to see monthly EMI.
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