A car is a depreciating asset — its value drops 15–25% the moment you drive off the lot, and another 10–15% per year. Financing it amplifies the cost. The Car Loan EMI Calculator helps you see exactly what financing adds to the sticker price, so you can negotiate hard or pay cash.
Car Loan EMI Calculator
Calculate your monthly car-loan EMI and total interest cost.
EMI Breakdown
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Why Car Loans Are Different from Home Loans
Two big differences. First, tenure is short (typically 3–7 years vs 15–30 for homes), which means less compounding of interest — but rates are higher (typically 8–12% vs 6–9%). Second, the underlying asset depreciates, so for the first 1–2 years you can owe more than the car is worth (“negative equity”).
The Formula
Same standard amortisation as any term loan.
Worked Example
How to Avoid Overpaying for Financing
- Get pre-approved from a bank before walking into the dealer — dealer financing is often 1–3% more expensive.
- Negotiate the cash price first, then talk financing. Dealers love bundling because it hides margin.
- Avoid 7-year auto loans — you’ll be underwater on the car for years.
- Consider a larger down payment — 20%+ down avoids negative equity in the early years.
Frequently Asked Questions
How is car loan EMI calculated?▾
Should I prepay or invest the surplus?▾
Can my EMI change?▾
What’s the difference between flat and reducing rate?▾
New vs used car loan rates?▾
Should I lease or buy?▾
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