Auto Loan EMI Formula
The standard formula used by all banks to calculate your monthly car loan EMI is:
EMI Formula
Where:
P = Loan amount (Car price − Down payment − Trade-in)
r = Monthly interest rate (Annual rate ÷ 12 ÷ 100)
n = Loan tenure in months
Example Calculation
For a car priced at ₹8,00,000 with ₹1,60,000 down payment, 9.5% annual interest, and 60 months tenure:
- Loan amount = ₹8,00,000 − ₹1,60,000 = ₹6,40,000
- Monthly rate = 9.5 ÷ 12 ÷ 100 = 0.007917
- EMI = 6,40,000 × 0.007917 × (1.007917)60 / ((1.007917)60 − 1)
- EMI ≈ ₹13,437
- Total payment ≈ ₹8,06,220
- Total interest ≈ ₹1,66,220
How to Use This Auto Loan Calculator
- Enter the car price (on-road price).
- Enter your down payment amount.
- Enter trade-in value if you are exchanging an old car (optional).
- Enter the interest rate offered by your bank.
- Enter the loan tenure in months.
- See your EMI, total interest, and total payment instantly.
Frequently Asked Questions
How is car loan EMI calculated?
EMI = P × r × (1+r)^n / ((1+r)^n − 1), where P is loan amount, r is monthly interest rate, and n is number of months.
Does down payment reduce EMI?
Yes. A higher down payment reduces the loan amount, which lowers both your monthly EMI and total interest paid.
What is a good interest rate for a car loan?
In India, new car loan rates usually range from 8% to 12%, while used car loans range from 10% to 16% depending on your credit score.
Can I prepay my car loan?
Yes. Most banks allow prepayment after 6–12 months. Prepaying reduces total interest significantly.