What is a Car Loan?
A Car Loan is a secured loan offered by banks and NBFCs to purchase a new or used vehicle. The car itself acts as collateral (hypothecation) until the loan is fully repaid. Interest rates typically range between 8.5% to 11% for new cars.
Who is Eligible for a Car Loan?
- Age: 21–65 years at loan maturity.
- Income: Minimum ₹3 Lakhs annually for salaried employees.
- Credit Score: A CIBIL Score of 750+ usually gets the lowest interest rates.
- Employment: At least 2 years of work experience is preferred.
New Car vs Used Car Loans
Banks offer different rates for New Car Loans versus Used Car Loans. Used car loans often have higher interest rates (12%–18%) and require a higher down payment compared to new car loans.
How This Car Loan Calculator Helps
Use this calculator to balance your down payment, tenure, and EMI so that your monthly budget stays comfortable without overpaying interest.
Down Payment Planning
Higher down payment reduces EMI and total interest cost.
Tenure Optimization
A 4–5 year tenure usually offers the best EMI–interest balance.
On-Road Cost Awareness
Plan for insurance, road tax, registration, and maintenance costs.
Car Loan EMI Formula
The standard formula used to calculate Car Loan EMI is:
- P = Loan Principal (Amount Borrowed)
- r = Monthly Interest Rate
- n = Loan Tenure in Months