About car loans
Car loans usually run for 1 to 7 years, sometimes 8. New cars get lower rates than used cars, and lenders often finance up to 80–90% of the on-road price. Car loans are commonly fixed rate, so the EMI stays the same for the whole loan.
Car loan rates in India typically range from about 8.5% to 13% a year, depending on the lender, your credit score and income. Tenures go up to about 8 years. These figures are indicative; always check the latest rate with your lender.
Sample car loan EMIs
| Loan amount | Rate | Tenure | Monthly EMI | Total interest |
|---|---|---|---|---|
| ₹5,00,000 | 9.5% | 5 years | ₹10,501 | ₹1,30,056 |
| ₹8,00,000 | 9.5% | 5 years | ₹16,801 | ₹2,08,089 |
| ₹10,00,000 | 9.5% | 5 years | ₹21,002 | ₹2,60,112 |
| ₹10,00,000 | 9.5% | 7 years | ₹16,344 | ₹3,72,894 |
| ₹15,00,000 | 9.5% | 5 years | ₹31,503 | ₹3,90,168 |
| ₹20,00,000 | 9.5% | 7 years | ₹32,688 | ₹7,45,789 |
How the EMI is calculated
EMI = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1)
P is the loan amount, r is the monthly interest rate (annual rate ÷ 12 ÷ 100) and n is the number of monthly instalments. Learn more on our main EMI calculator page.
Tax benefits
Salaried individuals get no income-tax deduction on a car loan for personal use. Self-employed people using the car for business may be able to claim interest and depreciation as business expenses. Ask a tax adviser.
Tips to pay less interest
- Pay a bigger down payment. A car loses value quickly, so borrowing less keeps you from owing more than the car is worth.
- Keep the tenure short. Five years or less keeps total interest reasonable.
- Check processing and foreclosure charges. Fixed-rate car loans often charge a fee to close early.
- Compare the dealer’s offer with your own bank. Your existing bank may offer a better rate.
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