Car Loan EMI Calculator
| Year | Principal Paid | Interest Paid | Balance |
|---|---|---|---|
| 1 | ₹1,32,664 | ₹66,616 | ₹6,67,336 |
| 2 | ₹1,45,109 | ₹54,171 | ₹5,22,227 |
| 3 | ₹1,58,721 | ₹40,559 | ₹3,63,506 |
| 4 | ₹1,73,610 | ₹25,670 | ₹1,89,896 |
| 5 | ₹1,89,896 | ₹9,384 | ₹0 |
| Month | EMI | Principal | Interest | Balance |
|---|---|---|---|---|
| 1 | ₹16,607 | ₹10,607 | ₹6,000 | ₹7,89,393 |
| 2 | ₹16,607 | ₹10,686 | ₹5,920 | ₹7,78,707 |
| 3 | ₹16,607 | ₹10,766 | ₹5,840 | ₹7,67,941 |
| 4 | ₹16,607 | ₹10,847 | ₹5,760 | ₹7,57,094 |
| 5 | ₹16,607 | ₹10,928 | ₹5,678 | ₹7,46,165 |
| 6 | ₹16,607 | ₹11,010 | ₹5,596 | ₹7,35,155 |
| 7 | ₹16,607 | ₹11,093 | ₹5,514 | ₹7,24,062 |
| 8 | ₹16,607 | ₹11,176 | ₹5,430 | ₹7,12,885 |
| 9 | ₹16,607 | ₹11,260 | ₹5,347 | ₹7,01,625 |
| 10 | ₹16,607 | ₹11,344 | ₹5,262 | ₹6,90,281 |
| 11 | ₹16,607 | ₹11,430 | ₹5,177 | ₹6,78,851 |
| 12 | ₹16,607 | ₹11,515 | ₹5,091 | ₹6,67,336 |
EMI calculated using the reducing balance method. Actual EMI may vary slightly based on the lender's calculation method and disbursement date.
How to Calculate Car Loan EMI
Car loan EMI (Equated Monthly Installment) is the fixed monthly amount you pay to repay your auto loan. It is calculated using the reducing balance method, the same formula used for home loans and personal loans in India. The formula is:
EMI = P × r × (1+r)^n / [(1+r)^n − 1]
Where P is the principal loan amount (car price minus down payment), r is the monthly interest rate (annual rate ÷ 12 ÷ 100), and n is the tenure in months. In the early months, a larger portion of your EMI goes toward interest. Over time, the interest component reduces and the principal component increases.
On-Road Price vs. Ex-Showroom Price: What Banks Finance
This distinction is critical when calculating your loan amount. The ex-showroom price is the base price from the manufacturer. The on-road price is what you actually pay and includes GST, road tax, registration charges, insurance, and other fees — typically 15–25% more than the ex-showroom price.
| Component | Typical Amount | Who Pays? |
|---|---|---|
| Ex-showroom price | Base price | Financed by bank |
| GST (28% + cess) | Included in ex-showroom for most cars | Included |
| Road tax | 4–20% of ex-showroom | Usually buyer's own funds |
| Registration fee | ₹600–₹1,500 | Buyer's own funds |
| Insurance (1st year) | ₹15,000–₹40,000 | Buyer's own funds or financed |
| Accessories | Optional | Sometimes financed |
Most banks finance up to 90% of the ex-showroom price for new cars. Some lenders offer 100% financing for applicants with excellent credit scores (>750 CIBIL). Road tax, registration, and insurance are typically paid from your own funds.
Car Loan Interest Rate Comparison
| Lender | Rate (New Car) | Rate (Used Car) | Processing Fee |
|---|---|---|---|
| SBI | 8.85% p.a. | 11.10% p.a. | ₹2,000 + GST |
| HDFC Bank | 8.50% p.a. | 13.75% p.a. | 0.5% of loan |
| ICICI Bank | 8.85% p.a. | 12.50% p.a. | 0.5–1% |
| Axis Bank | 8.70% p.a. | 14.00% p.a. | 0.25–1% |
| Kotak Mahindra | 9.00% p.a. | 14.00% p.a. | ₹3,500 flat |
Rates indicative as of 2025–26. Always confirm current rates with the lender.
Dealer Financing vs. Bank Financing
Car manufacturers operate their own finance arms (Maruti Finance, Hyundai Motor Finance, Tata Motors Finance, etc.) that can offer attractive rates during festival promotions. During Diwali and year-end periods, subsidised rates of 7–8% are not uncommon for specific models. However, these offers often come with conditions — you may need to skip negotiating the car price, forgo exchange bonus, or buy the dealer's insurance package.
Bank financing gives you more transparency and flexibility. Get pre-approved from two or three banks before visiting the showroom. Having a pre-approval letter strengthens your negotiating position on the car's ex-showroom price, since the dealer knows you are not dependent on their financing.
Frequently Asked Questions
How is car loan EMI calculated?
Car loan EMI uses the reducing balance formula: EMI = P × r × (1+r)^n / [(1+r)^n - 1], where P is the loan amount (car price minus down payment), r is the monthly interest rate (annual rate ÷ 12 ÷ 100), and n is the tenure in months. For example, a ₹8 lakh loan at 9% for 5 years: r = 0.0075, n = 60, EMI = ₹16,607 per month. You would pay ₹9.96 lakh in total — ₹1.96 lakh as interest.
What is a good car loan interest rate in India?
As of 2025–26, car loan interest rates in India typically range from 7.9% to 13% p.a. for new vehicles. SBI offers loans from 8.85%, HDFC Bank from 8.5%, Axis from 8.7%, and ICICI from 8.85%. Used car loans are higher — typically 12–18% p.a. Your rate depends on your CIBIL score (higher score = lower rate), income, employer profile, and the vehicle model. Always compare multiple lenders before finalising.
What is the difference between on-road price and ex-showroom price?
The ex-showroom price is the manufacturer's base price before local taxes and fees. The on-road price is what you actually pay and includes: ex-showroom price + GST (28% + cess for most cars) + Road Tax (varies by state, typically 2–20% of ex-showroom price) + Registration fee + Insurance (first year mandatory) + Fastag + optional accessories. The on-road price is typically 15–25% higher than the ex-showroom price. Banks usually finance the ex-showroom price, not the full on-road cost.
Should I choose dealer financing or bank financing?
Dealer financing (through the car manufacturer's finance arm, like Maruti Finance or Hyundai Motor Finance) is convenient and sometimes offered at subsidised rates during festive offers. However, these offers often apply only to specific models and require you to forgo cashback or discounts. Bank financing gives you more flexibility to negotiate the car price separately. Compare the total cost (EMI × months) under both options, including processing fees, before deciding.
Is it better to make a larger down payment for a car loan?
Yes, in almost all cases. A larger down payment reduces your loan principal, which reduces both your monthly EMI and the total interest paid. For example, on a ₹10 lakh car at 9% for 5 years: a 10% down payment (₹1 lakh) gives EMI ₹18,674 and total interest ₹2.20 lakh. A 30% down payment (₹3 lakh) gives EMI ₹14,563 and total interest ₹1.74 lakh. However, don't empty your emergency fund for a down payment — ensure you keep 3–6 months of expenses accessible.
Related Calculators
- EMI Calculator — Generic EMI for any loan type
- Personal Loan EMI Calculator — Unsecured loan EMI with processing fee
- Home Loan EMI Calculator — Housing loan EMI with LTV ratio