Car and two-wheeler loans are secured against the vehicle, so they're cheaper than personal loans. This calculator shows the EMI and total cost, so you can see how much the car really costs once interest is added.
How car loan EMI is calculated
EMI = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1)P = loan amount, r = yearly interest rate ÷ 12 ÷ 100, n = number of monthly instalmentsTotal interest = EMI × n − PNew car loans usually run up to 7 years, and two-wheeler loans 1–5 years. Banks typically finance 80–90% of the on-road price.
Worked example
Example: ₹7 lakh loan at 9% for 5 years
EMI = ₹14,531.
Total interest = ₹1,71,851, so the car costs about ₹1.7 lakh more than its price.
How big should the loan be?
A common guide is to put at least 20% down, keep the loan to 4 years or less, and keep total car costs (EMI, fuel, insurance, maintenance) under about 10–15% of your monthly income. A car loses value quickly, so a long loan can leave you owing more than the car is worth.
Salaried people can't claim tax deductions on car loan interest. Business owners and professionals using the car for work may be able to claim interest and depreciation as business expenses; ask your CA.
How to use this calculator
- Enter the loan amount after your down payment.
- Enter the rate and tenure.
FAQs
How big should my down payment be?
A common guide is at least 20% down, a loan of 4 years or less, and car costs under 10–15% of your income.
Results are estimates and aren't financial advice. For decisions about your own money, check with a qualified adviser. Spotted a mistake? Tell us.