Car Loan Calculator
Calculate your car loan EMI, total interest and total repayment. Enter the loan amount, interest rate and tenure to plan your car purchase.
Formula last reviewed 4 August 2026 · How we verify our calculators
Monthly EMI
- Total interest
- ₹2,08,089
- Total payment
- ₹10,08,089
Updates live as you type
Frequently asked questions
Lenders usually finance 80–90% of the car's on-road price; some offer up to 100% for select customers. The rest is your down payment, which reduces your EMI and interest.
Car loans run from one to eight years. A shorter tenure means a higher EMI but far less total interest. Avoid stretching the tenure beyond the period you plan to keep the car.
Yes. The car itself is the collateral, which keeps interest rates lower than unsecured personal loans. The lender holds a lien on the vehicle until the loan is repaid.
Prepaying reduces outstanding principal and total interest, and is most effective early in the tenure. Check for any foreclosure charges before prepaying.
Borrowing against something that loses value
An ₹8,00,000 car loan at 9.5% over five years costs ₹16,801 a month and ₹2,08,089 in interest — about 26% of the amount borrowed. Meanwhile the car itself will typically be worth half its purchase price by the time the loan matures.
That combination is what makes a car loan structurally different from a home loan. Both are secured, but one is secured against an appreciating asset and the other against a depreciating one. Lenders know this, which is why car loan rates run 8.5% to 12% rather than the 8.5% or so a home loan commands, and why loan-to-value is capped lower.
The calculation
EMI = P × r × (1 + r)ⁿ / ((1 + r)ⁿ − 1)
with r = 9.5 ÷ 12 ÷ 100 = 0.0079167 and n = 60.
(1.0079167)⁶⁰ = 1.6050. Numerator: 8,00,000 × 0.0079167 × 1.6050 = 10,164.7. Denominator: 0.6050. Divide: ₹16,801.
Total repaid: ₹10,08,089 on an ₹8,00,000 loan.
The depreciation problem
A new car in India typically loses:
- 15–20% in the first year
- around 30% by year two
- roughly 50% by year five
Set that against the loan balance. On a five-year loan you have repaid only about 35% of the principal by the end of year two, while the car has lost 30% of its value. For much of the early term you are underwater — you owe more than the car is worth — which becomes a real problem if the vehicle is written off, since insurance pays the insured declared value, not your loan balance.
This is what gap insurance or return-to-invoice cover addresses, and it is one of the few dealer add-ons worth genuinely considering on a heavily financed new car.
Tenure and total cost
Shortening the same loan from five years to three raises the EMI to about ₹25,643 but cuts total interest from ₹2,08,089 to roughly ₹1,23,148 — a saving of ₹84,941. Extending to seven years lowers the EMI but pushes total interest past ₹2.9 lakh while guaranteeing you spend years owing more than the car is worth.
The general principle: match the loan term to how long you will actually keep the car, and never finance a vehicle over a term longer than you expect to own it.
Reading your result
The total payment is only part of the cost of running a car. Add insurance (typically ₹15,000–₹40,000 a year), servicing, tyres, fuel and parking, and the annual cost of ownership often exceeds the EMI by a considerable margin.
Tax treatment is worth knowing: a salaried individual gets no deduction on a car loan. A business or self-employed person can claim depreciation on the vehicle and the interest as a business expense where the car is used for business — which materially changes the arithmetic and is one of the few cases where financing beats paying cash.
Common mistakes
Financing the on-road price rather than a sensible share of it. Most lenders cap at 80–90% of ex-showroom, and a larger down payment both reduces interest and shortens the underwater period.
Taking a seven-year loan. It minimises the EMI and maximises both interest and the risk of negative equity.
Buying add-ons through the loan. Extended warranties, accessories and paint protection financed at 9.5% for five years cost far more than their sticker price.
Ignoring the insurance and running costs when judging affordability. The EMI is roughly half the true monthly cost of a new car.
Assuming prepayment is penalty-free. Fixed-rate car loans commonly carry 3–6% foreclosure charges, and some impose a lock-in for the first six to twelve months.