Car Loan EMI Calculator
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Car Loan EMI Calculator

Team CARS24
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It must be noted that as per the latest data, India is the 4th biggest car market in the world, with a steady growth rate of 9.5 percent on a year-on-year basis. However, what’s important to mention here is that India’s used car market is even bigger than the new car bazaar, and hence, there’s been a huge demand for used car finance for many years now. With this, even the need for a reliable EMI calculator has been pretty high.

While the cyberspace has many car loan EMI calculators being offered for free, not all of them can be trusted. However, in this post, we have come up with some information about the used and new car loan EMI calculator that should help you understand the tool better and hence, plan your car finance properly. Here, in this post, we’ll discuss the SBI car loan EMI calculator.

How can a car loan EMI calculator help you?

Irrespective of what car you have decided to buy, a car loan makes for the largest portion of the amount that you need to pay the seller. Also, you need to replay this huge sum of money over a pre-decided tenure along with the interest levied on the loan. Hence, it’s necessary to know the EMI that you’ll be paying, which will, in turn, help you manage your finances better. Below, we have listed out all the benefits of using a car loan EMI calculator.

Benefits of Car Loan EMI Calculator
Saves timeThe biggest objective of a car loan EMI Calculator is that it does all the calculations for you and helps you save some time by not getting involved in all the complex mathematics. All the accurate EMI calculators are based on a standard formula for calculating the EMI.
Complete accuracyWhile you might be good with numbers, manual calculations can go wrong. An online EMI calculator, however, is always accurate.
Helps you plan efficientlyOnce you get to know the EMI you’ll be having to pay over a tenure, you can plan your finances better and even decide to go a segment above or lower, based on how easy it will be for you to pay an EMI. It will also help you plan your future expenses better as you’ll have an accurate idea of the money you’ll have to compulsorily pay every month over the next few years.
Breaks down the amount you need to payA car loan EMI calculator gives you a detailed calculation of not only the amount you need to pay back but also the interest you’ll be paying every month. It also tells you about other expenses like interest applicable and processing fees

What is a car loan EMI calculator?

The demand for four-wheelers has been on a rise for many years now. With an increase in purchasing power and also the several attractive vehicles available to suit the need of most type of buyers, almost every desires to own a car in today’s scheme of things. However, not every enjoys the cash liquidity to purchase a car. Therefore, most people opt for the finance option. It’s also a good option for those who do not wish to invest a large amount at once. In such a case, the car loan EMI calculator lets you get to know how much loan you can opt for for a desired EMI (Equated Monthly Installment). It’s a free tool that is available on the official websites of all the banks offering vehicle finance options. Any potential loan applicant can use this tool and even compare the new and used car loan options being provided by various organizations. 

The monthly amount calculated by car loan EMI calculator is the exact EMI you will have to pay the bank every month for the entire loan tenure. At the same interest rate of 9.25% but for a tenure of 5 years, the EMI per lakh is Rs 2,088, and you’ll have to pay total interest of Rs 25,279 per lakh over the entire loan period. If you take a loan of only 2 years, the EMI will be Rs 4,580 and the total interest payable will be Rs 9,919 for a loan amount of Rs 1 lakh. For a car loan per lakh loan amount at 9.25% new car loan interest rate, the EMI is as below:

Loan Tenure2 Years3 Years5 Years
EMI amount for loan amount ₹ 1 Lakh at 9.25%₹ 4,580₹ 3,192₹ 2,088
Total amount you pay back to the bank including principal and interest₹ 1,09,919₹ 1,14,898₹ 1,25,279
Interest you have to pay over loan tenure₹ 9,919₹ 14,898₹ 25,279

Amortization Schedule

Basically, an amortization schedule is nothing but a table of periodic loan payments that shows the amount of principal and the amount of interest that your EMI comprises of every month. It must be noted here that the first EMI has the maximum interest component and with every passing EMI, the interest component decreases and the principal component increases.

Car Loan Amortization Calculator

In case you borrow a sum of Rs 2 Lakh for a tenure of 2 years at a new car loan interest rate of 9.25 per cent, the EMI for your loan will be Rs 9,160 a month, while the total annual EMI will be Rs 1,09,919 a year. The table that we have below gives you the details of the EMI schedule of a loan of Rs 2 lakh for a period of Rs 2 lakh.

YearInterest Paid During The YearPrincipal Repaid During The YearTotal Amount Paid During The Year (Interest + Principal)Outstanding Principal
2020 ₹ 3,025₹ 15,295₹ 18,320₹ 1,84,705
2021 ₹ 13,047₹ 96,872₹ 1,09,919₹ 87,832
2022 ₹ 3,767₹ 87,832₹ 91,599₹ 0

As we said, every EMI has an interest component and a principal component. With every passing month, the interest you pay goes down while the principal goes up. In case of the above calculations of a car loan of Rs. 2 lakh taken at a rate of 9.25 per cent, the EMI you pay every month is Rs 9,160 while the total sum paid every year is Rs 1,09,919. OUt of this, the interest component is Rs 14,523 and principal component is Rs 95,396 for the first year of loan. Hence, you pay only 47.7 per cent of the principal in the first year, while in the second year, you pay 52,3 per cent of the remaining amount along with a lesser interest than what you pay in the first year.

Car Loan EMI Calculator Formula

As we said, all accurate online car loan EMI calculators use a standard formula that you cal also use for manually doing the calculations. You can calculate the EMI using the following equation – E= P. r. (1+r)^n/[(1+r)^n -1], wherein P is the principal amount (the loan you borrow), r is the rate of interest per month, n is the tenure of the loan in months and E is the EMI to be paid by you every month.

Car Loan EMI Calculator Advantage

There are many benefits of an online car loan EMI calculator. The same have been listed out in the table we have below –

 Advantages of Car Loan EMI Calculator
Saves timeEMI calculator saves you a lot of time as you need not do any calculation manually. You get the EMI figure as soon as you submit the variables (principal, interest rate, tenure). This can save your valuable time
Accurate results No matter how good your calculations are, there’s always room for error. However, with online car loan EMI calculators, a cent per cent accuracy is a given, which saves you the inconvenience of going through complex calculations and also mitigates any risk of wrong calculations
Plan your finances Car loan EMI calculator tells you about the sum of money you’ll have to pay back every month. This helps you plan your future finances better. 
Allows evaluating multiple schedules EMI calculator lets you quickly figure out the EMI you’ll be liable to pay for a given loan amount borrowed for different tenures. This can help you efficiently decide the loan tenure

How does Car Loan Interest Calculator Impact on EMI?

A car loan interest calculator can quickly tell you the interest you’ll have to pay on a principal amount based on different methods of interest calculations. Here are all the scenarios that affect your car loan EMI –

Impact of Car Loan Interest Calculator on EMI
Flat interest rateIn this case, the interest you need to pay is decided on the original principal amount for the entire loan tenure. Hence, in case you borrow a sum of Rs 5 lakh at 10% flat rate of interest for a period of 5 years, the EMI will be Rs 12,500. The total interest per annum will be 500,000* (10/100) = 50,000. Thus, total interest in 5 years = 50,000 * 5 = 250,000. In every EMI, you pay the principal and the interest. Your monthly EMI will be Rs 12,500. 
Reducing balance methodIn this case, the interest is charged only on the outstanding amount of the loan. While in this method, the new car loan interest rate is often higher than the first method, you end up paying less interest as the principal amount decreases every month. For example, if you borrow Rs 5 Lakh at 10% rate of interest for a period of 5 years, the EMI will be Rs 10,624.
Zero interest schemes (also called 0% finance scheme)This is one of those methods that are simply clever marketing tactics. Hence, you must be careful while choosing this method. Mostly, this scheme is offered when the discounts that are available on the car are not given to you but you don’t pay any interest, at least on the papers. Therefore, it’s better to ask for discounts and then choose a loan on the actual price of car using any of the above two methods. 

Car Loan Repayment

  • The repayment of car loan is easy as long as you’ve planned your loan efficiently. This is the very reason that a car loan EMI Calculator holds such great importance.
  • Once you’re comfortable paying a fixed amount every month, chances are that the entire repayment will be a breeze as it won’t cause any financial strain.
  • There are several modes of payment of Car loan EMI, which we have discussed in the next section.

What are the modes of payment for Car Loan EMI?

As we said, there are several modes of payment of car loan EMI. You can choose the one that is the most convenient for you.

  • One of the most convenient methods of paying car loan EMI is through ECS mandate in favor of the lender. Also, it must be understood that it’s not mandatory to hold a bank account with the same bank from which you’ve taken a loan as you can simply issue an ECS mandate from one’s salary account or normal bank account.
  • A great benefit of paying EMI through ECS is that there is no risk of cheque bouncing due to signature mismatch
  • Other modes can include post-dated cheques and payments by demand drafts. However, these are out-dated methods not in use anymore.

Car Loan Calculator India 2020

  • Car loan interest rates starts @ 9.25%.
  • Lowest EMI per lakh on car loan is ₹ 1,622 for a loan tenure of 7 years.
  • Get car loan upto 100% value of the car.
Loan Amount2 Year Loan4 Year Loan7 Year Loan
₹ 3 Lakh₹ 13,740₹ 7,501₹ 4,865
₹ 6 Lakh₹ 27,480₹ 15,002₹ 9,730
₹ 12 Lakh₹ 54,959₹ 30,005₹ 19,459

Lowest Car Loan EMI

The lowest car loan EMI varies from one bank to other. This is simply because EMI has a direct relation with rate of interest as well as loan tenure, and these are the factors that vary from one bank to another. Hence, the lowest EMI of every bank differs to that of another by some margin. For example, the lowest car loan EMI from SBI for a loan tenure of 7 years is Rs 1,624 per lakh, while the same for IndusInd Bank is Rs 2,157 as the latter offers car loan only for a maximum tenure of 5 years.

BankCar Loan EMI Per Lakh, New CarCar Loan EMI Per Lakh, Used Car
HDFC Bank Car Loan₹ 1,564 for 7 years₹ 1,351 for 7 years
SBI Car Loan₹ 1,559 for 7 years₹ 1,082 for 5 years
ICICI Bank Car Loan₹ 1,624 for 7 years₹ 819 for 5 years
Axis Bank Car Loan₹ 1,622 for 7 years 
IndusInd Bank Car Loan₹ 2,157 for 5 years 
Kotak Bank₹ 2,199 for 5 years₹ 729 for 5 years
PNB₹ 1,596 for 7 years₹ 973 for 5 years
Union Bank of India₹ 1,589 for 7 years₹ 948 for 5 years
Central Bank of India₹ 1,609 for 7 years₹ 1,065 for 5 years
Andhra Bank₹ 1,629 for 7 years₹ 933 for 5 years
IDBI Bank₹ 1,624 for 7 years 
Federal Bank₹ 1,617 for 7 years₹ 976 for 5 years
Bank of India₹ 1,634 for 7 years₹ 1,068 for 3 years
Bank of Maharashtra₹ 1,622 for 7 years₹ 1,113 for 5 years
Corporation Bank₹ 1,637 for 7 years 
Indian Bank₹ 1,642 for 7 years₹ 911 for 5 years
OBC₹ 1,611 for 7 years₹ 897 for 3 years
Bank of Baroda₹ 1,604 for 7 years₹ 930 for 3 years
United Bank of India₹ 1,614 for 7 years 

FAQs

Q: How to Use Car Loan EMI Calculator?

A: Using a car loan EMI Calculator is very easy. You just need to input the amount you need to borrow (principal), the rate of interest being offered to you and the loan tenure. You’ll instantly get to know the EMI you’ll be liable to pay.

Q: What is an EMI?

A: EMI stands for Equated Monthly Installment, which is basically the amount you need to pay back to the lender every month. While it’s a fixed amount throughout the loan tenure, its components, which include interest and principal, vary every month.

Q: How is the Car Loan EMI to be paid?

A: These days, the EMIs are paid through ECS mandate, which allows your lender to automatically deduct the amount from your bank account every month. While one can even pay back through post-dated cheques or DDs, these are archaic methods not in use any more.

Q: How is car loan EMI calculated monthly?

A: EMIs or Equated Monthly Installments are calculated as a sum of Principal Amount + Interest on Principal amount. Mathematically, EMI is calculated using the formula:
{P x R x (1+R)^N / [(1+R)^N-1]}
where, P = Principal amount of the loan, R = Rate of interest and N = Number of monthly installments.

Q: What are the documents required to apply for a car loan?

A: The loan applicant needs to submit his identity proof and current address proof, a copy of PAN Card, bank statement and income proofs (Form 16/Salary Slips/ITR). 

Q: What is the minimum down payment for a car loan?

A: In most cases, the lenders finance up to 85 per cent of on-road value of the vehicle or 100 per cent of the ex-showroom price. In most the cases, you need to pay the remaining amount out of your pocket as the downpayment for the purchase.

Q: What is the tenure for which I can avail a car loan?

A: Most banks offer a loan tenure of 3, 5 or 7 years, while there are some banks that even offer a car loan for as little as 1 year.

Q: What is the maximum number of years I can get a car loan for?

A: The rate of interest varies as per conditions. It’s mostly calculated as per the principal amount, your credit history and the loan tenure.

Q: What happens when I pay a bigger amount than my actual EMI for a car loan?

A: In case you pay a bigger amount than EMI, it’s called part-prepayment. This reduces the principal amount and also the overall interest you’ll pay. However, some banks levy a prepayment charge and you need to check with your bank for managing your loan efficiently.

Q: What is the difference between fixed-rate and floating-rate interest on car loan?

A: In fixed-rate interest scheme, the amount you need to pay as interest remains constant and hence, your EMIs remain fixed. In floating-rate interest, your rate of interest changes every month, which could result in larger EMIs every month.

Q: How can I make my loan EMI payments?

A: These days, the EMIs are paid through ECS mandate, which allows your lender to automatically deduct the amount from your bank account every month. While one can even pay back through post-dated cheques or DDs, these are archaic methods not in use any more.

Q: What should be done after paying the last EMI?

A: Once you’ve paid the last EMI, you need to obtain a loan repayment receipt from the bank, collect all the documents from the lender and even the entire repayment statement. You also need to get the Hypothecation clause from the RC removed.

Q: Why is my CIBIL Score important for getting my loan sanctioned?

A: CIBIL Score is based on your credit history and a higher CIBIL Score gives the lender a reassurance that you would pay back sincerely. Hence, you can get your loan sanctioned easily if you have a high CIBIL Score.

Q: What should be the minimum CIBIL score to get a car loan?

A: As such, there’s no fixed definition of a minimum CIBIL Score to easily get a car loan. However, it’s recommended to have a CIBIL score of at least 750 to easily get a car loan.

Q: What are the steps for hypothecation removal from RC after Car Loan closure?

A: To remove the hypothecation from RC, you need to first receive the documents mentioned earlier from the lender, submit them to the RTO along with a Hypothecation Removal Application and wait for the updated smart card RC to be posted to your registered address.

Q: What will be the charges if I miss paying an EMI on time?

A: In case you miss an EMI, you’ll be liable to pay a penalty. This penalty varies from one bank to another and you should ask the lender while your loan is processed.

Q: What if I miss EMI payment or there is an ECS bounce?

A: In case you miss an EMI, you’ll be liable to pay a penalty. Also, it could lower your CIBIL Score, at least temporarily.

Q: What if I get delay in paying the vehicle loan EMI?

A: In case you miss an EMI, you’ll be liable to pay a penalty. Also, it could lower your CIBIL Score, at least temporarily.

Q: Why it is necessary to calculate EMI beforehand?

A: It is important to calculate the EMI before hand so that you can plan your finances better and decide the loan amount only if you are sure you’ll be comfortable paying an EMI over the preferred loan period.

Q: Does the loan tenure affect my EMI for car loan?

A: Yes, the loan tenure affect the EMI for a loan amount. Larger the loan tenure, smaller will be the EMIs and vice versa.

Q: What are two methods of paying car loan EMI? Which one is better?

A: Car loan EMI can be paid through either of the following schemes-
– EMI in arrears scheme – this is the standard method of paying EMI where the interest for a month (and principal repayment) is payable at or after the end of the month.
– Advance EMI scheme – you pay interest and EMI at the beginning of the month. So, each month, you pay interest on the amount that you have already repaid to the bank at the beginning of the month.

Q: Is the car loan EMI fixed or can it change in future?

A: The loan EMI changes in case of any of the following situations –
– In case the floating rate of interest on your car loan changes
– For partly disbursed loans availed under tranched EMI scheme, your loan EMI will increase with each disbursement.
– On making a prepayment of your loan, you can opt to either reduce the EMI and keep the loan tenure unchanged or keep the EMI unchanged and reduce the loan tenure.
– You loan EMI can change through any other situations as per terms and conditions of the loan agreement.

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