Auto loan EMI = P × r × (1+r)ⁿ ÷ ((1+r)ⁿ − 1), where P is loan amount, r is monthly rate, n is months. A ₹6 lakh new-car loan at 9% for 5 years = ₹12,455/month with ₹1.47 lakh total interest. Keep car-related expenses (EMI + insurance + fuel + maintenance) under 40% of monthly take-home, and aim for a tenure ≤48 months to avoid being underwater on rapid depreciation.
About this calculator
A car loan (auto loan) calculator computes your monthly EMI based on the vehicle's on-road price, down payment, interest rate, and tenure. In India as of April 2026, new car loan rates range from 8.50% (SBI for eligible borrowers) to 12% (NBFCs for used cars), with private bank rates typically at 9.00–9.85%.
The calculator also shows the 'underwater' risk — a situation where your outstanding loan balance exceeds the car's current market value. New cars depreciate 15–20% in the first year and 10–15% per year after. Combined with the slow principal reduction of early amortization, this creates a gap where the car is worth less than you owe, typically in years 1–3 for buyers with low down payments.
For Electric Vehicle (EV) purchases, some banks offer concessional rates (50–100 basis points lower). Section 80EEB of the Income Tax Act also provides up to ₹1.5 lakh interest deduction on EV loans under the old tax regime. The Car Loan Calculator includes a depreciation vs balance chart to help you visualise this risk over the full loan tenure.
A good rule of thumb: keep your total car-related expenses (EMI + insurance + fuel + maintenance) under 40% of your monthly take-home salary. Use the Take-Home Salary Calculator to find your exact net income before sizing the loan.
Common uses
- Calculate monthly payments before visiting a car dealership
- See how your trade-in value reduces the loan amount
- Determine the total cost of a car including financing charges
- Check how long you will be underwater on the loan
- Compare 48-month vs 60-month vs 72-month loan terms
Frequently asked questions
What does 'underwater' on an auto loan mean?
You are underwater when the outstanding loan balance exceeds the car's current market value. This typically happens in the first 1–2 years when new cars depreciate quickly. Being underwater means if you sell or trade in the car, you still owe money to the lender.
How does a trade-in value affect my auto loan?
Your trade-in value is applied as a credit toward the purchase price of the new vehicle, reducing the amount you need to finance. A higher trade-in value means a smaller loan, lower monthly payments, and less total interest paid.
Is a longer auto loan term better?
Longer terms (60–72 months) lower monthly payments but increase total interest paid and the risk of being underwater for longer. Most financial advisors recommend keeping auto loans to 48 months or less to minimize total cost.
How much auto loan can I afford?
A safe limit is keeping the EMI under 15% of monthly take-home, and total car costs (EMI + fuel + insurance + maintenance) under 40%. For a ₹50,000/month take-home, that means an EMI of about ₹7,500 — supporting roughly a ₹3.5–4 lakh loan over 5 years at 9%.
Is there a tax benefit on EV (electric vehicle) loans in India?
Yes. Section 80EEB of the Income Tax Act allows a deduction of up to ₹1.5 lakh per year on interest paid on an EV loan sanctioned between 1 April 2019 and 31 March 2023 — but only under the old tax regime. Several banks also offer a 25–100 bps concessional rate on EV loans.
What is the typical interest rate on a car loan in India for 2026?
New-car loan rates start at 8.50% for top-credit borrowers (SBI) and rise to 12% for used-car loans from NBFCs. Most private banks (HDFC, ICICI, Axis) charge 9.00–9.85%. Rates are influenced by the RBI repo rate, your credit score (750+ gets the best rates), and the make/model.