Car loan EMI calculator
Work out the EMI before the showroom quote starts looking affordable. A car loan is shorter than a home loan, but the asset usually loses value from day one.
16.8 thousand
For a car loan of ₹8,00,000 at 9.5% for 5 years.
Year-by-year repayment
| Year | Principal paid | Interest paid | Total paid | Balance left |
|---|---|---|---|---|
| 1 | ₹1,31,234 | ₹70,383 | ₹2,01,618 | ₹6,68,766 |
| 2 | ₹1,44,259 | ₹57,359 | ₹2,01,618 | ₹5,24,506 |
| 3 | ₹1,58,576 | ₹43,041 | ₹2,01,618 | ₹3,65,930 |
| 4 | ₹1,74,315 | ₹27,303 | ₹2,01,618 | ₹1,91,615 |
| 5 | ₹1,91,615 | ₹10,003 | ₹2,01,618 | ₹0 |
What makes car loan EMI different
A car loan is secured by the vehicle, but unlike a house, the car usually depreciates. That changes how you should think about the EMI. A lower EMI through a longer tenure may feel comfortable, but it can leave you paying interest on an asset whose resale value has already dropped.
The cleaner approach is to decide the car budget first, then the down payment, and only then the loan amount. If the EMI looks affordable only at a very long tenure, the car is probably stretching the budget.
Down payment matters
A higher down payment reduces the principal immediately. Since EMI is calculated on the loan amount, not the car price, every rupee of down payment reduces interest for the full tenure. It also gives you a buffer if you need to sell the car early.
Car loan versus other loans
- Compared with a home loan, a car loan usually has a shorter tenure and a higher rate.
- Compared with a personal loan, the rate may be lower because the vehicle is collateral.
- Compared with paying cash, a loan preserves liquidity but adds interest cost.
FAQs
What is a good car loan tenure? v
Most car loans work best in the 3-5 year range. A longer tenure reduces EMI but increases interest and can keep you paying for a car whose resale value has fallen sharply.
Should I make a higher down payment on a car? v
Usually yes, if it does not disturb your emergency fund. A higher down payment reduces the loan amount, EMI and total interest, and lowers the risk of owing more than the car is worth.
Is car loan EMI different from home loan EMI? v
The formula is the same, but the context is different. A car is a depreciating asset, the tenure is shorter, and the interest rate is often higher than a home loan.
How much car EMI is safe? v
Keep the car EMI low enough that fuel, insurance, service and parking still fit comfortably. The EMI is only one part of the monthly cost of owning a car.