Working out your car loan EMI
Enter the amount you will borrow (the on-road price minus your down payment), the rate offered and the tenure. For an ₹8 lakh loan at 9.5% over 5 years, the EMI is about ₹16,801 and the total interest about ₹2.08 lakh.
Dealers often quote a “flat rate”, charged on the full loan for the whole tenure. A flat rate of 5% is roughly equal to a reducing rate of about 9%. Always ask for the reducing-balance rate, which is what this calculator uses.
Choosing the tenure
Cars lose 15–20% of their value in the first year. A long tenure keeps the EMI low but can leave you owing more than the car is worth. Most buyers do best with 3–5 years and a down payment of at least 20%.
Before you sign
- Compare the dealer’s financing with your own bank’s offer.
- Check the processing fee and foreclosure charges.
- Do not let the dealer bundle insurance or accessories into the loan without showing you the cost.
- Keep total EMIs (all loans) within about 40% of take-home pay.
Frequently asked questions
How much EMI for an ₹8 lakh car loan?
At 9.5% for 5 years, the EMI on ₹8 lakh is about ₹16,801 and the total interest is about ₹2.08 lakh.
How much of the car price will a bank finance?
Banks usually lend up to 80–90% of the on-road or ex-showroom price of a new car, and less for used cars. You pay the rest as a down payment.
What tenure is best for a car loan?
A car loses value quickly, so a shorter tenure of 3–5 years keeps total interest low and avoids owing more than the car is worth.
Can I prepay a car loan?
Yes, but fixed-rate car loans often carry a foreclosure charge of 2–5% of the outstanding amount. Check the loan agreement first.
Last reviewed: 13-10-2026. Rates and rules are checked against official sources; tell us if something has changed. Contact