Car Loan Calculator

Drive your dream car without wrecking your finances. Check your real affordability.

Home Loan
Car Loan
Personal Loan
Loan Amount
₹10,00,000
Interest Rate (p.a)
9.5%
Loan Tenure
5 Yr
Monthly EMI ₹21,002
Principal Amount ₹10,00,000
Total Interest ₹2,60,112
Total Cost ₹12,60,112

Car Loan Scam Alert: Flat vs. Reducing Rate

This is the #1 mistake Indian car buyers make. When you walk into a showroom, the dealer might offer you a loan at a "Flat Rate" of 4%. This sounds incredibly cheap compared to a Bank's 9% rate. Do not be fooled.

The Trap:
• Flat Rate (4%): Interest is calculated on the original loan amount for the entire tenure. You pay interest even on the money you have already repaid.
• Reducing Rate (9%): Interest is calculated only on the outstanding balance.
Reality Check: A 4% Flat Rate is mathematically equivalent to an 8-9% Reducing Rate. Always ask the lender for the "Annualized Percentage Rate" (APR) or the reducing balance rate.

The "Depreciation" Factor

Unlike a Home Loan (where the asset appreciates), a Car Loan is for a depreciating asset. As soon as you drive a new car out of the showroom, it loses 10-15% of its value.

The 20/4/10 Rule for Car Buying:
To ensure you don't overspend on a depreciating asset, financial experts suggest:

  • 20% Down Payment: Pay at least 20% upfront. Never take a 100% funding loan.
  • 4 Years Tenure: Don't stretch the loan to 7 years just to lower the EMI. You will end up paying more interest than the car's resale value.
  • 10% of Income: Your car EMI (plus insurance and fuel) should not exceed 10% of your monthly take-home salary.

Foreclosure and Prepayment Charges

Car loans in India (unlike Home Loans) usually carry a Foreclosure Penalty.

  • Fixed Rate Loans: Most car loans are fixed-rate. Banks charge 3% to 6% of the outstanding principal if you want to close the loan early.
  • Lock-in Period: Many lenders do not allow you to prepay the loan for the first 6 to 12 months.
  • Strategy: If you expect a bonus or windfall in the future, negotiate a "Zero Foreclosure Charge" clause before signing the loan agreement. Some PSU banks offer this.

Loan Against Car (Top-Up)

If you have repaid a significant portion of your car loan and need urgent cash, you can opt for a "Top-Up Loan" or "Loan Against Car."
Since the car is already collateral with the bank, the processing is fast, and rates are cheaper than Personal Loans (usually 1-2% higher than your existing car loan rate).

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Disclaimer & Risk Warning

Not Financial Advice: This tool is for estimation only. Final EMI depends on your Credit Score and the bank's LTV (Loan to Value) ratio.

Rates: Interest rates mentioned (8.5% - 11%) are indicative market averages and subject to change by RBI policies.