Car Loan Calculator

Car loan EMI formula

This calculator uses monthly reducing-balance interest:

Enter the lender’s reducing-balance interest rate. APR can include charges as well as interest, so it is useful for comparing the full cost but may not reproduce the contractual EMI when entered as the interest rate. RBI’s Key Facts Statement circular explains that distinction.

Worked example: price, down payment and EMI

Suppose the vehicle costs ₹12,00,000 and you pay ₹2,00,000 upfront. That leaves ₹10,00,000 to borrow at an illustrative 9% a year for 5 years. The rate is an assumption, not a bank offer.

The monthly rate is 9 / 1200 = 0.0075 and the term is 60 months. Apply the formula to get the monthly payment, then total the repayments and subtract the principal to find interest.

Totals use the unrounded monthly payment internally. Multiplying the displayed rounded EMI can give a slightly different total. The acquisition-cost line excludes charges not included in the entered vehicle price.

How a larger down payment changes the EMI

The table isolates the borrowing-cost effect. A larger upfront payment also leaves less cash available for other expenses. The CFPB explains how a down payment reduces the financed amount.

Comparing dealer quotes and bank loans

A flat rate charges interest on the original principal for the full term. For this example’s loan, an illustrative 5.5% flat rate produces an EMI of ₹21,250 and an equivalent nominal reducing-balance rate of about 10.01%. That conversion excludes fees; it is not an all-in APR.

Compare the contractual interest rate, processing charges and APR in the lender’s Key Facts Statement. Read how flat and reducing interest rates differ before comparing two quotes stated on different bases.

New and used cars: what to include

Use the amount being financed from the itemised quote. Registration, initial insurance and other purchase costs belong in that amount only if they are being financed. The tool does not add them automatically, and it has no separate trade-in or old-loan payoff field.

The same payment formula can model a new or used car with equal monthly instalments. It assumes a constant rate, no missed payments and no balloon balance. Budget separately for fuel, maintenance and insurance renewals; check the agreement for any prepayment conditions.

For a repayment breakdown, open the loan amortization schedule calculator. CFPB’s auto-loan glossary explains why a longer term can increase total interest and leave a borrower owing more than the vehicle is worth.

Frequently asked questions

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