Buying a car is India's second biggest financial decision after a home. Whether you're eyeing a Maruti Suzuki Swift at ₹6.5 lakh or a Tata Nexon EV at ₹15 lakh, a car loan can split that into comfortable monthly payments. Most banks offer 7–9 years tenure and up to 90% financing. Use the calculator above to find the exact EMI for your budget — adjust the down payment slider and watch your EMI drop in real time.

Car Loan EMI for Popular Models in India (2025)

Car Model	Price	EMI (₹)	Total Interest
Maruti Swift	₹6.5L	₹11,810	₹58,600
Hyundai i20	₹8.0L	₹14,535	₹72,100
Tata Nexon	₹10.0L	₹18,169	₹90,140
Toyota Fortuner	₹35.0L	₹63,590	₹3,15,400

*Assuming 9% interest, 5-year tenure, 20% down payment. Actual rates may vary.

New Car vs Used Car Loan – EMI Comparison

Buying used can save on depreciation, but loan terms are different. Here is how they compare:

Factor	New Car	Used Car
Interest Rate	8.75% - 10%	11% - 14%
Max Tenure	7 years	5 years
Max Financing	90%	70-80%
EMI for ₹8L loan	₹16,607	₹17,399

How to Get the Lowest Car Loan Interest Rate

Maintain a High CIBIL Score

A score above 750 qualifies you for the best rates. Pay all existing EMIs and credit card bills on time.

Compare Multiple Banks

Do not accept the first offer. Use this calculator to compare EMI across SBI, HDFC, ICICI, Axis, and smaller NBFCs.

Negotiate with Dealer Financing

Dealers often have tie-ups with banks and can offer 0.25-0.50% lower rates. Ask for their best rate before signing.

Choose a Shorter Tenure

A 3-year tenure gets a lower rate than 7 years. If you can afford higher EMI, choose shorter tenure.

Should You Pay Cash or Take a Car Loan?

✓ Take a Loan If...

• You can invest the cash at higher returns (12%+ in mutual funds)
• You want to build your CIBIL score
• The interest rate is below 9%
• You need liquidity for emergencies

✗ Pay Cash If...

• You have sufficient savings without depleting emergency fund
• You can negotiate a better cash discount (2-5% off)
• You do not want monthly EMI commitment
• The car is a second hand / low-value vehicle

How is Car Loan EMI Calculated?

In plain words

Car loan EMI is calculated on the loan amount after deducting your down payment. Most Indian banks offer up to 90% financing for new cars and 70-80% for used cars. The reducing balance method ensures you pay interest only on the outstanding principal.

How the calculation works

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

Where:
P = Loan Principal (Car Price – Down Payment)
R = Monthly Interest Rate (Annual Rate ÷ 12 ÷ 100)
N = Loan Tenure in Months

A quick example

Let us calculate the EMI for a popular car in India:

Car Price:₹10,00,000 (Maruti Suzuki Brezza)

Down Payment:₹2,00,000 (20%)

Loan Amount:₹8,00,000

Interest Rate:9% p.a.

Tenure:5 years (60 months)

Step by step

1.Loan amount P = ₹10,00,000 - ₹2,00,000 = ₹8,00,000
2.Monthly interest rate R = 9% ÷ 12 ÷ 100 = 0.0075
3.Total months N = 5 × 12 = 60 months
4.EMI = 8,00,000 × 0.0075 × (1.0075)^60 ÷ ((1.0075)^60 - 1)
5.Monthly EMI ≈ ₹16,607
6.Total interest paid over 5 years = ₹1,96,420

So the answer is: Monthly EMI ≈ ₹16,607 | Total Interest: ₹1,96,420 | Total Cost: ₹9,96,420

Frequently Asked Questions

What is the EMI for a ₹10 lakh car loan?

For a ₹10 lakh car loan at 9% for 5 years, the EMI is approximately ₹20,759. Total repayment would be ₹12,45,540 with ₹2,45,540 in interest. A higher down payment will reduce both EMI and total interest.

Which bank has the lowest car loan interest rate in 2025?

As of 2025, SBI offers car loans from 8.75%, HDFC from 8.90%, ICICI from 9.00%, and Axis from 9.10%. Rates depend on your CIBIL score (750+ gets the best rates) and the car model (EV loans often have lower rates).

Should I take a new car loan or used car loan?

New car loans have lower interest rates (8.75-10%) and longer tenures (up to 7 years). Used car loans have higher rates (11-14%) and shorter tenures (up to 5 years). However, used cars have lower depreciation. Use the calculator to compare EMI for both options.

How does down payment affect car loan EMI?

A higher down payment reduces the loan amount, which directly lowers your EMI and total interest. For example, on a ₹10 lakh car, 20% down (₹2 lakh) gives ₹16,607 EMI, while 30% down (₹3 lakh) reduces EMI to ₹14,531 — saving ₹12,456 in interest over 5 years.

Is it better to pay cash or take a car loan?

If the interest rate is lower than what you can earn by investing the cash (e.g., 9% loan vs 12% mutual fund returns), taking a loan and investing the cash makes sense. Also, car loans help build your CIBIL score. Use the calculator to compare your specific scenario.