Should I get a car loan from a bank or the dealership?

Banks typically offer lower interest rates than dealership financing. Dealership loans (through captive finance companies like Maruti Finance or Hyundai Finance) are convenient but often carry rates 1-2% higher than bank loans. Always check your bank's rate first, get pre-approval, and then use that as a benchmark when the dealership offers financing.

What is the maximum tenure for a car loan?

Most lenders offer car loan tenures from 1 to 7 years. Longer tenures reduce the monthly EMI but increase total interest paid significantly. On an ₹8 lakh loan at 9.5%, extending from 5 years to 7 years saves ₹2,847 per month but costs an additional ₹1.09 lakh in total interest. Whenever possible, choose a 3-5 year tenure.

Can I get a car loan with a low CIBIL score?

Some lenders offer car loans to borrowers with CIBIL scores below 700, but you will face higher interest rates (often 2-4% above standard rates), stricter conditions, and may need a co-applicant or guarantor. Improving your credit score before applying - by paying off existing debt and ensuring no missed EMIs for 6-12 months - will secure you significantly better terms.

What happens to my car loan if I sell the vehicle before the loan is repaid?

You cannot legally transfer ownership of a hypothecated (loan-financed) vehicle without the lender's consent. To sell the car before the loan is repaid, you must either fully repay the outstanding loan amount to get a No Objection Certificate (NOC) from the lender, or the buyer pays the lender directly and takes over the loan (loan transfer, subject to lender approval and buyer's creditworthiness).

Auto Loan Calculator

Q: What is a good interest rate for a car loan in India?

Car loan interest rates in India typically range from 7.5% to 14% per annum depending on the lender, your credit score, the type of vehicle (new vs used), and the loan tenure. New car loans from top banks like SBI, HDFC, and ICICI generally offer 8.5-10.5%. Used car loans carry higher rates of 11-15%. Borrowers with CIBIL scores above 750 qualify for the best rates.

Calculate monthly car loan payments and total interest before visiting the dealership.

🚗 What is an Auto Loan?

An auto loan (also called a vehicle loan or car loan) is a secured financing product that lets you purchase a car by borrowing money from a bank or financial institution and repaying it in fixed monthly instalments (EMIs) over an agreed period. The vehicle itself serves as collateral - the lender holds a hypothecation charge on the vehicle's Registration Certificate (RC) until the loan is fully repaid.

Auto loans are among the most widely used retail credit products in India. With car prices ranging from ₹4 lakh for entry-level hatchbacks to ₹1 crore+ for premium SUVs, financing through a loan has become the default purchase method for most buyers. The Indian auto loan market is dominated by banks like SBI, HDFC, ICICI, Axis, and Kotak, as well as Non-Banking Financial Companies (NBFCs) like Mahindra Finance, Tata Capital, and Bajaj Finance.

Unlike home loans, auto loans have shorter tenures (1-7 years), higher interest rates (reflecting the depreciating nature of the asset), and smaller loan amounts. New car loans typically finance up to 85-90% of the on-road price. Used car loans generally finance up to 70-80% of the car's market value at the time of purchase. The on-road price includes ex-showroom price, road tax, registration charges, and insurance - all of which can add 15-20% to the ex-showroom price.

This auto loan calculator uses the standard reducing-balance EMI formula to compute your exact monthly payment, total interest cost, and full repayment amount - giving you all the information you need before signing any loan agreement.

📐 Auto Loan EMI Formula

Car loan EMIs are calculated using the same reducing-balance formula used for all amortizing loans:

EMI = [P × R × (1+R)^N] / [(1+R)^N − 1]

P = Loan Amount = Car Price × (1 − Down Payment %)

R = Monthly rate = Annual Interest Rate ÷ 12 ÷ 100

N = Total months = Tenure (years) × 12

Total Interest = (EMI × N) − P

For example, if you buy a car priced at ₹10 lakhs with a 20% down payment (₹2 lakhs), the loan amount P = ₹8 lakhs. At 9.5% annual interest for 5 years: R = 9.5/12/100 = 0.007917, N = 60 months. The monthly EMI works out to approximately ₹16,758, and you will pay ₹2,05,480 in total interest over the 5-year period.

📖 How to Use This Calculator

Steps to Calculate Your Car Loan

Enter the car price - use the on-road price (including road tax, registration, and insurance), not just the ex-showroom price.

Set your down payment percentage - the amount you will pay upfront. The calculator derives the loan amount automatically.

Enter the interest rate - check your bank's current car loan rates online or call for a rate quote. Compare at least 2-3 lenders.

Select the loan tenure - car loans in India typically run 1-7 years. A shorter tenure means a higher EMI but far lower total interest.

Click Calculate Car Loan to instantly see your monthly EMI, loan amount, total interest, and total repayment amount.

💡 Example Calculations

Example 1 - Mid-Range Sedan

Car Price: ₹12 lakhs | Down Payment: 20% | Rate: 9.5% | Tenure: 5 years

Down Payment = ₹2,40,000 · Loan Amount (P) = ₹9,60,000

R = 9.5 ÷ 12 ÷ 100 = 0.007917 · N = 5 × 12 = 60 months

(1.007917)^60 = 1.6054 · EMI = [9,60,000 × 0.007917 × 1.6054] / [1.6054 − 1]

Monthly EMI ≈ ₹20,110 · Total Interest ≈ ₹2,46,600 · Total Payable ≈ ₹12,06,600

Try this example →

Example 2 - Premium SUV

Car Price: ₹35 lakhs | Down Payment: 30% | Rate: 8.75% | Tenure: 4 years

Down Payment = ₹10,50,000 · Loan Amount (P) = ₹24,50,000

R = 8.75 ÷ 12 ÷ 100 = 0.007292 · N = 4 × 12 = 48 months

(1.007292)^48 = 1.4196 · EMI = [24,50,000 × 0.007292 × 1.4196] / [1.4196 − 1]

Monthly EMI ≈ ₹60,751 · Total Interest ≈ ₹4,66,048 · Total Payable ≈ ₹29,16,048

Try this example →

❓ Frequently Asked Questions

What is a good interest rate for a car loan in India?+

Car loan interest rates in India range from 7.5% to 14% per annum. New car loans from top banks like SBI, HDFC, and ICICI typically offer 8.5-10.5% for borrowers with good credit. Used car loans carry higher rates of 11-15%. Borrowers with CIBIL scores above 750 qualify for the best rates. Always compare rates from at least 3 lenders before deciding.

Should I get a car loan from a bank or from the dealership?+

Banks typically offer lower rates than dealership financing. Dealership loans are convenient but often carry rates 1-2% higher than bank rates. Get pre-approved by your bank first, then use that rate as leverage when the dealership offers financing. Sometimes manufacturers run zero-cost EMI or subvented rate schemes - compare total cost carefully as these may have hidden costs baked into the car price.

What is the maximum car loan tenure available?+

Most lenders offer car loan tenures up to 7 years (84 months). While a longer tenure reduces your monthly EMI, it significantly increases total interest paid. On a ₹10 lakh loan at 9.5%, extending from 5 to 7 years saves ₹3,491 per month but costs an extra ₹1.42 lakh in total interest. Choose the shortest tenure your budget comfortably allows.

How much down payment should I make on a car loan?+

A 20% down payment is the standard recommendation. This reduces your loan amount, lowers total interest, and keeps your EMI manageable. Since cars depreciate by 15-20% the moment you drive them off the showroom, a higher down payment also ensures you are not "underwater" on the loan (owing more than the car is worth). Some lenders finance up to 90% of on-road price for excellent credit profiles.

Can I foreclose my car loan early without penalty?+

RBI guidelines prohibit banks from levying prepayment penalties on floating-rate loans. For fixed-rate car loans, lenders may charge a foreclosure fee of 2-5% of the outstanding principal. Always check your loan agreement for foreclosure terms before taking the loan. If you plan to repay early, choose a lender with zero prepayment charges - the interest savings from early foreclosure can be substantial.

What is a good interest rate for a car loan in 2026?+

New car loan rates in India typically range from 8.5%–12% per annum depending on the lender and your credit score. Banks like SBI, HDFC, and ICICI offer competitive rates; NBFCs tend to charge 1–3% more. A CIBIL score above 750 generally qualifies for the lowest available rate. For used cars, expect rates 1–3% higher than for new cars. Always compare the total interest payable - not just the monthly EMI - when choosing between loan offers.

Should I make a larger down payment on a car loan?+

Yes. A larger down payment reduces the loan principal, which lowers your EMI and total interest paid. It also means you are less likely to be underwater (owing more than the car is worth) - a common issue in the first 2–3 years when depreciation is steepest. Aim for at least 20% down. If you can pay 30–40% upfront, the total cost of ownership drops significantly. Avoid 0-down, long-tenure loans - the total interest can approach the car value itself.

What credit score do I need to get a good auto loan rate?+

Generally, a credit score of 700+ qualifies for competitive auto loan rates. Scores above 750 typically get the best rates (3-5% APR). Scores between 620-699 see rates of 7-12%. Below 620 is subprime, with rates of 14-20%+. Even a 1% rate difference on a $25,000 loan over 5 years saves about $650 in total interest.

Is it better to take a longer tenure auto loan to lower my EMI?+

A longer tenure reduces EMI but significantly increases total interest paid. A Rs 10 lakh car loan at 9% for 3 years has EMI ~Rs 31,800 with total interest ~Rs 1.45 lakh. At 7 years, EMI ~Rs 16,200 but total interest ~Rs 3.6 lakh - 2.5x more. Stick to the shortest tenure your budget allows. Most financial planners recommend not financing a car beyond 4-5 years.