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Car Loan EMI Calculator

The monthly instalment, what the car really costs, and what prepaying saves.

₹
1,00,0001,00,00,000
% p.a.
620
years
18
Monthly EMI
₹16,801
Amount borrowed
₹8,00,000
Interest you pay
₹2,08,089
Total repaid
₹10,08,089

Over 5 years you repay ₹10,08,089 on a loan of ₹8,00,000. That is 26% of what you borrowed, added on top, as interest.

What if you pay a bit extra?

Your lender will not model this for you. Every rupee paid on top of the instalment comes straight off the balance, so it stops earning interest for the whole remaining life of the loan. Put in a number you could genuinely manage.

₹
016,801
₹
02,01,618
₹0₹4L₹8L0y1y2y3y4y5y
Hover to read the balance at any year

If the rate moves

Almost every home loan in India is floating, so the rate you sign at is not the rate you pay for the whole term. When it resets, most lenders hold the EMI steady and quietly extend the tenure instead, which is easy to miss because nothing changes in your bank statement. This is what each move does to your loan, at the tenure you set above.

7.50%
₹16,030
or 4y 9m at today's EMI
8.50%
₹16,413
or 4y 11m at today's EMI
9.50%now
₹16,801
your EMI
10.50%
₹17,195
or 5y 2m at today's EMI
11.50%
₹17,594
or 5y 4m at today's EMI

Read the bottom line rather than the middle one. Holding the instalment where it is turns a rate rise into extra years rather than a bigger bill, and those years are almost entirely interest. Ask your lender for the revised tenure after every reset.

Repayment schedule

YearPrincipal paidInterest paidBalance left
1₹1,31,234₹70,383₹6,68,766
2₹1,44,259₹57,359₹5,24,506
3₹1,58,576₹43,041₹3,65,930
4₹1,74,315₹27,303₹1,91,615
5₹1,91,615₹10,003₹0

Early instalments are mostly interest and late ones are mostly principal, which is why paying extra in the first years saves far more than the same amount paid later.

What a car loan adds to the price

An ₹8 lakh car loan at 9.5% over 5 years costs about ₹16,800 a month, and roughly ₹2.07 lakh in interest across the tenure. The car does not cost ₹8 lakh. It costs a little over ₹10 lakh, paid slowly, while the asset itself loses value.

That is the difference between a car loan and a home loan and it is worth being blunt about it. A house may appreciate. A car will not. You are borrowing against a depreciating asset, so the tenure decision cuts the other way.

How an EMI is calculated

EMI = P × i × (1 + i)^n ÷ [(1 + i)^n − 1]
  • P is the loan amount
  • i is the monthly rate, so 9% a year is 0.09 ÷ 12 = 0.0075
  • n is the number of monthly instalments

The instalment stays the same every month, but what it is made of does not. Early on, most of it is interest and very little touches the principal. That reverses over the tenure, which is exactly what the schedule above shows.

Car loan EMI on common amounts

Monthly instalments at 9.5% a year, a typical new-car rate from a bank. Used-car loans usually run two to four percentage points higher, and dealer finance higher still.

Monthly EMI on a car loan at 9.5% a year
Loan amount1 years2 years3 years5 years7 years
₹4L₹35,073₹18,366₹12,813₹8,401₹6,538
₹6L₹52,610₹27,549₹19,220₹12,601₹9,806
₹8L₹70,147₹36,732₹25,626₹16,801₹13,075
₹10L₹87,684₹45,914₹32,033₹21,002₹16,344
₹15L₹1,31,525₹68,872₹48,049₹31,503₹24,516
₹20L₹1,75,367₹91,829₹64,066₹42,004₹32,688

The seven-year column is worth looking at carefully. It produces the friendliest EMI on the page and leaves you paying for a car that has lost most of its value long before the last instalment clears.

Keep the tenure short

Seven-year car loans exist because they make an expensive car look affordable. They also mean paying interest on a vehicle for years after its value has halved, and they raise the risk of being underwater, meaning you owe more than the car is worth, for most of the loan. Three to five years is the sensible range. Move the slider above and compare the total interest.

A larger down payment is the cheapest lever

Every rupee of down payment is a rupee you do not pay interest on. Raising the down payment from 10% to 25% on an ₹8 lakh purchase removes over ₹1 lakh of financing and cuts the interest proportionally, with no negotiation required.

Before you finance a car at all

Run the same monthly figure through the SIP calculator. ₹16,800 a month for five years is about ₹10 lakh of instalments; invested at 12% instead it projects to roughly ₹13.8 lakh. That is not an argument against owning a car. It is the actual price of the decision, which is worth seeing before you sign.

Frequently asked questions

What is the EMI on an ₹8 lakh car loan?

At 9.5% over 5 years, about ₹16,800 a month, with roughly ₹2.07 lakh paid in interest over the tenure. Shorten it to 3 years and the EMI rises to about ₹25,600 but the interest falls to around ₹1.2 lakh.

What is a good interest rate for a car loan in India?

New car loans from banks generally run between 8.5% and 11%, depending on your credit score, the lender and whether the car is new or used. Used-car loans are typically 2 to 4 percentage points higher. Dealer financing is often more expensive than going directly to your own bank.

How long should a car loan be?

Three to five years. Longer tenures lower the EMI but keep you paying interest well after the car has lost most of its value, and increase the chance of owing more than the car is worth if you need to sell.

How much interest can I save by prepaying my loan?

More than most people expect, because every extra rupee comes straight off the principal and stops earning interest for the whole remaining life of the loan. On a ₹50 lakh loan at 8.5% over 20 years, ₹5,000 a month extra saves roughly ₹13.9 lakh in interest and ends the loan about four and a half years early, close to ₹1.50 saved for every ₹1 prepaid. Put your own figures into the prepayment section above.

Should prepayment reduce my EMI or my tenure?

Reduce the tenure if you can afford to. On the same loan and the same extra ₹5,000 a month, cutting the tenure saves around ₹13.9 lakh in interest against around ₹6 lakh from cutting the EMI, because a shorter loan stops the interest clock sooner. Lenders often apply prepayment to the EMI by default without asking, so state which one you want in writing. Reducing the EMI is the right call only when monthly cash flow is genuinely tight.

Is there a penalty for prepaying a loan?

On floating-rate home loans taken by individuals, the RBI does not permit foreclosure charges or prepayment penalties. Fixed-rate loans and many personal and car loans can carry one, typically 2% to 5% of the amount outstanding. Check the sanction letter before making a large prepayment, and ask for the revised amortisation schedule afterwards.

Should I pay cash or take a car loan?

If you have the cash and no higher-return use for it, paying outright avoids the interest entirely. Financing makes sense when the loan rate is low and the cash is genuinely doing better elsewhere after tax. Be honest about whether it is actually invested or just spent.

Does a bigger down payment reduce the EMI?

Yes, proportionally, and it reduces the total interest by the same proportion. It is the simplest way to cut the cost of a car loan, because it requires no negotiation and no change in rate.

A return needs a portfolio behind it

This tool assumes a rate. These are the books a SEBI-registered desk actually runs to chase one.

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