Car Loan EMI Calculator
Work out your exact monthly car loan payment, total interest cost, and compare loan offers β for new cars, used cars, and EVs.
Car Loans Work Differently From Home Loans β Here's How
The single biggest structural difference: most Indian car loans carry a fixed interest rate, not floating. When the RBI cut rates by 125 bps in 2025, home loan EMIs fell automatically β but car loan EMIs stayed exactly where they were, because the rate was locked at sanction. Only a few PSU banks (PNB, for instance) offer floating-rate car loans.
The practical implication: the rate you negotiate on day one is the rate you live with. There's no benchmark reset coming to rescue an expensive loan. This makes comparison shopping before signing far more important for car loans than for home loans.
The Flat Rate Trap β Read This Before Visiting the Showroom
Dealership finance desks often quote a "flat rate" that looks irresistibly low. A flat rate charges interest on the original loan amount for the entire tenure, ignoring that your balance shrinks every month. The honest equivalent β the reducing-balance rate every bank quotes β is nearly double:
| Quoted "Flat Rate" | True Reducing-Balance Equivalent |
|---|---|
| 5% flat | β 9.2% reducing |
| 6% flat | β 11.0% reducing |
| 7% flat | β 12.8% reducing |
This calculator uses the reducing-balance method β the same one banks use. If a dealer's quoted EMI is lower than what you compute here for the same rate, they're quoting flat. Ask for the reducing-balance rate in writing.
What Lenders Are Charging in 2026
SBI's new car loan scheme currently runs 8.85β9.75% fixed, with processing fees often waived for digital applications through YONO. Private banks and NBFCs range wider, roughly 9β14% depending on credit profile. Used-car loans cost 3β5% more than new-car loans because the collateral depreciates from an already-reduced value.
Green car loans: most major lenders now discount EV loans by 0.25β0.50% versus petrol/diesel equivalents. Note that the Section 80EEB tax deduction for EV loan interest (up to βΉ1.5 lakh) applied only to loans sanctioned between April 2019 and March 2023 β it has lapsed, so don't let a salesperson use it as a closing argument.
The Total-Cost Math Most Buyers Skip
A car is a depreciating asset financed with interest β the only purchase where both the asset and your money shrink simultaneously. Consider a βΉ12 lakh car on a 5-year loan at 9.5%:
- EMI: βΉ25,205 β total paid: βΉ15.12 lakh
- Car's resale value after 5 years (~45% depreciation): β βΉ6.6 lakh
- Real 5-year cost: βΉ8.5 lakh + fuel + insurance + maintenance
Two decisions shrink this: a bigger down payment (20β30% instead of the minimum 10β15%) and a shorter tenure. The 3-year EMI on the same loan is βΉ38,420 β painful monthly, but it cuts total interest from βΉ3.12 lakh to βΉ1.83 lakh.
Business Use Changes Everything
For personal-use cars there is no tax benefit whatsoever on loan interest β under either tax regime. But if the vehicle is used for business and registered appropriately, the picture flips: loan interest becomes a deductible business expense under Section 37(1), and you can claim 15% depreciation per year on written-down value. A business owner in the 30% bracket paying βΉ1 lakh annual interest effectively saves βΉ30,000 in tax β plus the depreciation shield. This is why consultants and proprietors often register vehicles in the business name.