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Car Loan EMI Calculator — Latest Indian New & Used Car Loan Rates

Loan amount EMI inputs
Monthly EMI
₹16,801
Total interest
₹2,08,089
Total payment
₹10,08,089
Formula 
EMI = P × R × (1+R)ⁿ / ((1+R)ⁿ − 1)

Where P = principal, R = monthly interest rate, n = tenure in months.

Source: RBI Master Circular on Loans and Advances, RBI/2024-25/01

What is a car loan EMI?

A car loan EMI (Equated Monthly Instalment) is the fixed monthly payment for a new or used car loan, computed using the RBI reducing-balance method. Banks typically finance 80%–90% of the ex-showroom price; some lenders extend this to the on-road price at a slightly higher rate.

Most Indian car loans are fixed-rate (unlike home loans, which default to floating-rate post-October 2019). The rate is locked at sanction and the EMI stays constant across the tenure.

How is car loan EMI calculated?

The formula is the same RBI reducing-balance equation:

EMI = P × R × (1+R)ⁿ / ((1+R)ⁿ − 1)

Worked example — ₹8 lakh new-car loan at 9.5% over 5 years:

  1. R = 9.5 ÷ 12 ÷ 100 = 0.007917
  2. (1+R)⁶⁰ = 1.6053
  3. EMI = 800,000 × 0.007917 × 1.6053 ÷ (1.6053 − 1) = ₹16,797 / month
  4. Total payment = 16,797 × 60 = ₹10,07,820
  5. Total interest = ₹2,07,820

Factors that affect your car loan EMI

  • Principal financed — banks typically lend 80%–90% of ex-showroom or 75%–80% of on-road price. Use a 20% down-payment as the default planning anchor.
  • Interest rate — varies by car age (new vs used), bank, and credit profile. 0.5% rate change on ₹10 lakh / 5 years = ~₹260/month EMI difference.
  • Tenure — longer tenure lowers EMI but the car may depreciate below outstanding principal by year 4–5 of a 7-year loan.
  • Used vs new — used cars carry a 1.5–3 percentage point premium and often shorter max tenure (5 years vs 7 years).
  • Co-applicant income — adds to eligibility but rarely changes the rate.

Where to plan beyond the EMI

  • On-road price — RTO + insurance + TCS adds 12%–18% on top of ex-showroom
  • Processing fee — 0.40%–1.0% of loan amount + 18% GST
  • Prepayment / foreclosure: 2%–6% of outstanding (most banks)
  • Comprehensive insurance is mandatory for the duration of the loan

We have model-specific calculators with current finance-company tables for:

Worked examples

Three scenarios at this calculator's defaults.

Scenario EMI Total interest Total payment
Hatchback — ₹6L over 5 years at 9.5% ₹12,601 ₹1,56,067 ₹7,56,067
Sedan / SUV — ₹12L over 5 years at 9.5% ₹25,202 ₹3,12,134 ₹15,12,134
Premium SUV — ₹25L over 7 years at 10% ₹41,503 ₹9,86,249 ₹34,86,249
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Frequently Asked Questions

How is car loan EMI calculated in India?
Indian car loans use the RBI reducing-balance method: EMI = P × R × (1+R)ⁿ / ((1+R)ⁿ − 1). For an ₹8 lakh loan at 9.5% over 5 years, EMI is ₹16,797 — total payment ₹10.08 lakh, total interest ₹2.08 lakh. The formula is identical to home loans; only the rate range and tenure differ.
What is the typical car loan interest rate in India?
New car loans range 9.0%–13.0% p.a. across Indian banks (SBI, HDFC, ICICI, Axis at 9.0%–10.4%; private banks and NBFCs up to 13%). Used car loans are 1.5–3 percentage points higher. Floating-rate options are rare for car loans — most are fixed-rate for the tenure.
What is the maximum car loan tenure?
Most banks offer up to 7 years (84 months) for new cars and up to 5 years (60 months) for used cars. Longer tenure reduces EMI but raises total interest substantially — and the car often depreciates below the outstanding principal in years 4–6 of a 7-year loan, which complicates resale.
What is the difference between ex-showroom and on-road price for car loans?
Ex-showroom is the manufacturer's quoted price. On-road price adds RTO/road tax (4%–18% by state), comprehensive insurance (~3%), TCS for cars over ₹10 lakh (1%), and accessories. Banks typically finance against ex-showroom (some up to 90%) or on-road (some at 80%). See our on-road price glossary entry for details.
Can I get 100% car loan financing?
Some banks advertise '100% financing' — but this means 100% of the ex-showroom price, not the on-road price. You will still need to fund the gap (RTO + insurance + TCS = ~12%–18% of ex-showroom, depending on state and price band). True 100% on-road financing is rare and usually attracts a higher rate.
Is there a prepayment penalty on car loans?
Most Indian banks levy a 2%–6% prepayment / foreclosure charge on car loans (unlike floating-rate home loans where RBI banned the penalty). Read your bank's MITC document — some banks waive the charge after 24 months, others charge throughout the tenure.
Can I claim tax benefits on car loan interest?
Generally no — car loan interest is not deductible for individuals using the car for personal use. If the car is registered to a business or self-employed professional and used predominantly for business, interest may be claimed as a business expense under Section 37, with depreciation also available. Consult a CA for your case.
What documents are needed for a car loan?
Identity proof (Aadhaar/PAN), address proof, income proof (3 months' payslips and 6 months' bank statements; or 2 years' ITR for self-employed), employment proof, the car invoice (proforma), insurance proposal, and a down-payment receipt. Most banks disburse within 3–7 working days of complete documentation.
Can I refinance my car loan to a lower rate?
Yes — banks offer 'car loan balance transfer' but the math rarely works for car loans because: (1) tenure is short (so interest savings are limited), (2) the new bank charges a fresh processing fee (~1%), and (3) the existing bank may charge prepayment penalty. Balance transfer makes most sense in years 1–2 if your rate is more than 2 percentage points above current published rates.
Should I take a car loan or pay cash?
Compare your cash's opportunity cost against the loan rate. If you can earn over 9% post-tax (e.g., long-term equity SIPs returning 12% pre-tax, ~10.5% post-LTCG-tax), a 9% car loan is roughly break-even; longer-tenure loans become a slight wealth-builder. If your alternative is a fixed deposit (~7% post-tax), paying cash is better. Personal-finance rule: never take a car loan to maintain a lifestyle, only when the cash has a better home.
Compliance disclaimer

Loan rates and terms shown are sourced from public bank disclosures; actual rates depend on credit profile, loan amount, and lender underwriting. This page is educational and does not guarantee loan approval or terms.

About this calculator

Reviewed by Jayesh Jain, AMFI Registered Mutual Fund Distributor (ARN-286359 — verify ).

Last reviewed: 2026-05-04

Formula source: RBI Master Circular on Loans and Advances, RBI/2024-25/01

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