Car Loan Calculator

What is a Car Loan?

A car loan is a secured loan taken to purchase a vehicle, where the car itself serves as collateral. In India, banks and NBFCs offer car loans at interest rates typically ranging from 7% to 12% per annum for new cars and 10% to 16% for used cars. The loan tenure usually ranges from 1 to 7 years. Understanding the EMI, total interest, and amortization helps you plan your finances and choose the right loan tenure.

How to Use This Calculator

Enter the on-road price of the car, your planned down payment, the offered interest rate, and the loan tenure in years. Click "Calculate Car Loan EMI" to see the loan amount, monthly EMI, total interest payable, total amount payable, and a detailed yearly amortization table showing principal and interest breakdown for each year.

Car Loan EMI Formula

The calculator uses the standard EMI formula:

Loan Amount = Car Price - Down Payment

EMI = P x r x (1+r)^n / [(1+r)^n - 1]

Where P = loan amount, r = monthly interest rate (annual rate / 12 / 100), and n = total months (years x 12).

Frequently Asked Questions

How much down payment should I make for a car loan?

Most banks require a minimum down payment of 10% to 20% of the on-road price. A higher down payment reduces your loan amount and thereby your EMI and total interest. Experts recommend making at least 20% down payment to keep EMIs manageable.

What is the ideal car loan tenure?

Car loan tenures typically range from 1 to 7 years. A shorter tenure means higher EMIs but lower total interest. A 3 to 5 year tenure is considered ideal as it balances affordable EMIs with reasonable total interest cost. Avoid tenures longer than 5 years as the total interest paid increases significantly.

Can I prepay or foreclose my car loan?

Yes, most banks allow prepayment or foreclosure of car loans. RBI has mandated that banks cannot charge prepayment penalties on floating-rate loans. For fixed-rate loans, a small penalty of 2% to 5% may apply. Prepaying your loan early can save a significant amount on interest.