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Auto Loan Calculator

Enter your vehicle details to calculate monthly EMI, total interest, and complete payment breakdown.

₹
Total on-road price of the vehicle
₹
Amount you can pay upfront (usually 15-30% of vehicle price)
%
Interest rate from your lender (typically 6-12% depending on bank)
Duration of the loan (typically 2-7 years)

Loan Details

Enter vehicle details above to see your loan breakdown.

Auto Loan Calculation Formula

EMI Calculation

Formula:

EMI = P × r × (1+r)^n / [(1+r)^n - 1]

Where:
P = Loan Amount
r = Monthly Interest Rate (Annual Rate / 12 / 100)
n = Total Months (Years × 12)

Related Calculations

Formulas:

Loan Amount = Vehicle Price - Down Payment Total Interest = (EMI × n) - Loan Amount Total Payment = EMI × n
Example Calculation:

Scenario: Car price ₹10,00,000 with ₹2,00,000 down payment, 8% interest for 5 years

Loan Amount = ₹10,00,000 - ₹2,00,000 = ₹8,00,000

Monthly Rate = 8% / 12 / 100 = 0.00667

Total Months = 5 × 12 = 60 months

EMI = ₹8,00,000 × 0.00667 × (1.00667)^60 / [(1.00667)^60 - 1] = ₹16,276

Auto Loan Types & Current Interest Rates

Different banks and vehicle types have different interest rates:

Loan Type Typical Interest Rate Loan Tenure Best For
New Car Loan 6.5% - 9.5% p.a. 2-7 years Buying new vehicles from authorized dealers
Used Car Loan 8.5% - 12% p.a. 2-5 years Purchasing pre-owned vehicles
Two-Wheeler Loan 7.5% - 15% p.a. 1-5 years Bikes and scooters
Commercial Vehicle Loan 7.5% - 10.5% p.a. 3-7 years Taxi, auto-rickshaw, commercial vehicles
Car Finance (Dealer) 6% - 9% p.a. 2-7 years Direct from dealers with subsidized rates

Understanding Auto Loans

Key Components
  • Principal: Amount actually borrowed from the lender
  • Interest: Cost of borrowing, calculated as percentage per year
  • EMI: Equal Monthly Installment paid throughout loan tenure
  • Down Payment: Initial amount paid from your pocket (20-30%)
  • Loan Tenure: Duration to repay the entire loan (2-7 years typical)
Smart Loan Planning
  • Down Payment: Higher down payment = Lower EMI & less interest
  • Interest Rate: Compare rates across 5-10 banks for best deal
  • Tenure: Longer tenure = Lower EMI but more total interest
  • Credit Score: Better score = Better interest rates (750+ ideal)
  • Insurance: Comprehensive insurance mandatory; budget ₹5,000-15,000 annually

Real-World Auto Loan Examples

Example 1: Budget Car Purchase

Scenario: Buying a Maruti Swift for ₹6,50,000 with ₹1,30,000 down payment at 8.5% interest for 4 years

Calculation:

  • Loan Amount: ₹6,50,000 - ₹1,30,000 = ₹5,20,000
  • Monthly EMI: ≈ ₹13,175
  • Total Interest: ≈ ₹1,14,400
  • Total Cost: ₹1,30,000 + ₹6,34,400 = ₹7,64,400

Plus insurance (~₹7,000/year) and registration costs

Example 2: Luxury Car Financing

Scenario: BMW 3 Series for ₹45,00,000 with ₹10,00,000 down, 7.5% interest for 5 years

Calculation:

  • Loan Amount: ₹45,00,000 - ₹10,00,000 = ₹35,00,000
  • Monthly EMI: ≈ ₹67,950
  • Total Interest: ≈ ₹5,76,600
  • Total Cost: ₹10,00,000 + ₹40,76,600 = ₹50,76,600

Luxury cars have higher insurance (~₹35,000-50,000/year)

Example 3: Shorter Tenure (Pay Less Interest)

Scenario: Hyundai Creta ₹12,50,000 with ₹3,50,000 down at 8% interest for 3 years (vs. 5 years)

Calculation:

  • Loan Amount: ₹12,50,000 - ₹3,50,000 = ₹9,00,000
  • Monthly EMI (3 years): ≈ ₹27,600 (Higher EMI)
  • Total Interest: ≈ ₹94,400
  • vs. 5 years: EMI ≈ ₹18,250, Total Interest ≈ ₹1,95,000

Shorter tenure saves ₹1,00,600 in interest despite higher monthly payment

Example 4: Two-Wheeler Loan

Scenario: Royal Enfield bike for ₹2,50,000 with ₹50,000 down at 11% interest for 2 years

Calculation:

  • Loan Amount: ₹2,50,000 - ₹50,000 = ₹2,00,000
  • Monthly EMI: ≈ ₹8,975
  • Total Interest: ≈ ₹15,400
  • Total Cost: ₹50,000 + ₹2,15,400 = ₹2,65,400

Two-wheelers have shorter tenure and higher rates due to depreciation

When to Use Auto Loan Calculator

Use This Calculator When:
  • ✓ Planning to buy a new or used vehicle
  • ✓ Comparing loan offers from different banks
  • ✓ Testing different down payment scenarios
  • ✓ Checking impact of interest rate changes
  • ✓ Deciding between 3-year vs 5-year loan tenure
Key Decision Points:
  • ✓ Verify EMI fits your monthly budget (40-50% of monthly income)
  • ✓ Calculate total cost including insurance & fuel
  • ✓ Compare down payment impact on monthly burden
  • ✓ Check if shorter tenure is affordable
  • ✓ Budget for maintenance & repair costs

Frequently Asked Questions

EMI (Equated Monthly Installment) is a fixed amount you pay every month to repay your auto loan. It includes both principal and interest. The EMI is calculated using a specific formula that considers the loan amount, interest rate, and loan tenure. Even though EMI remains constant, the principal-to-interest ratio changes each month. In early months, you pay more interest; in later months, you pay more principal. Banks provide detailed amortization schedules showing this breakdown.

Most banks recommend a down payment of 20-30% of the vehicle price. This is the sweet spot that balances your immediate cash outflow with reducing your monthly EMI. A higher down payment (40-50%) further reduces EMI and total interest but depletes your savings. A lower down payment (10-15%) increases EMI and interest cost. Consider your financial situation: maintaining emergency funds is important, so don't stretch for a very high down payment.

Used car loans typically have higher interest rates (8.5-12%) compared to new car loans (6.5-9.5%). This is because used vehicles have higher depreciation risk and may have hidden defects. The loan tenure for used cars is also shorter (2-5 years) compared to new cars (5-7 years). Banks consider the vehicle's age, mileage, and condition when approving used car loans. If the vehicle is more than 10 years old, some banks may not finance it at all.

Shorter tenure (3-4 years) means higher EMI but significantly lower total interest paid. Longer tenure (5-7 years) means lower EMI but higher total interest. Choose based on your monthly budget and financial goals. If you can afford higher EMI comfortably, shorter tenure is better financially. If your budget is tight, longer tenure helps, but you'll pay substantially more interest. Remember: most cars lose significant value in first 3-4 years, so longer loans can result in owing more than the vehicle's value (negative equity).

Yes, most auto loans allow prepayment or early closure. Prepayment saves you a significant amount of interest. However, check if your loan has a prepayment penalty clause (typically charged if you close within first 2-3 years). The penalty is usually 1-2% of outstanding principal. Even with penalty, prepayment often saves money. Using bonus money, inheritance, or savings to prepay auto loans is a smart financial decision since interest rates are relatively high. Always get a prepayment/foreclosure statement from your bank to understand exact savings.

Beyond EMI, budget for: (1) Insurance - Comprehensive coverage costs ₹5,000-20,000 annually depending on vehicle value, (2) Fuel - Calculate based on mileage and your driving habits, (3) Maintenance - Regular servicing, spare parts, repairs (₹5,000-15,000 annually), (4) Registration/RTO - Annual road tax varies by vehicle type and state, (5) Parking - Monthly parking fees in cities, (6) Depreciation - Vehicle loses 30-40% value in 3 years. Many buyers forget these costs and end up in financial stress. Total cost of ownership can be 40-50% more than just the EMI amount.

Compare loans across at least 5-10 banks using this calculator. Key factors: (1) Interest Rate - Even 0.5% difference saves thousands in interest, (2) Processing Fee - Usually 0.5-1.5% of loan amount, (3) EMI - Calculate for same vehicle, down payment, and tenure, (4) Total Cost - Principal + Interest + Fees, (5) Prepayment Charges - Understand the penalty structure, (6) Customer Service - Read reviews about loan servicing, (7) Loan Approval Time - Critical if you need funds quickly. Use this calculator with different interest rates to see the actual impact. A 1% rate difference on ₹8 lakhs can save you ₹50,000+ in interest.

Your credit score significantly affects auto loan approval and rates. Typically: (1) 750+ Score - Best rates available (6-7.5%), quick approval, (2) 700-750 Score - Good rates (7-8%), may require higher down payment, (3) 650-700 Score - Higher rates (8-10%), stricter conditions, (4) Below 650 - May be rejected or offered very high rates (12%+). A good credit score can save you ₹1,00,000+ in interest on large loans. Ways to improve score: pay bills on time, reduce credit utilization, avoid defaults, maintain older credit accounts. Even a 50-point improvement can save you several percentage points on interest rates.
Quick Tips
  • Compare rates from 5-10 banks
  • Good credit score saves ₹1-2 lakhs
  • Down payment 20-30% is ideal
  • EMI ≤ 40-50% of monthly income
  • Budget for insurance & maintenance
  • Shorter tenure saves interest
Disclaimer
This calculator is for estimation only. Actual EMI varies based on processing fees, insurance, and credit profile. Interest rates subject to RBI policies. Consult your bank for exact figures.
Learn More

EMI Components: Each payment includes both principal and interest. Early payments are more interest, later payments more principal.

Loan Types: New car (6.5-9.5%), Used car (8.5-12%), Two-wheeler (7.5-15%)

Tenure Impact: 3-year vs 5-year loan: Higher EMI but significant interest savings

Learn more on Investopedia ↗

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