About Car Loan Calculator

A car loan is a type of secured loan that helps you finance the purchase of a vehicle. Our Car Loan Calculator helps you calculate:

• Your monthly EMI (Equated Monthly Installment)
• The total interest you'll pay over the loan tenure
• The amortization schedule showing principal and interest breakup
• The impact of down payment on your loan
• The effect of processing fees on your total cost

How to use this calculator

1. Enter the car price
2. Set your down payment amount
3. The loan amount will be calculated automatically
4. Enter the interest rate offered by your lender
5. Set the loan tenure in years and months
6. Include the processing fee percentage if applicable
7. Click "Calculate" to see your results

Understanding Car Loan Terms

• Down Payment: The initial payment you make upfront when purchasing a car. A higher down payment reduces your loan amount and EMI.
• Loan Amount: The amount you borrow from the lender (Car Price - Down Payment).
• Interest Rate: The rate at which interest is charged on your loan amount, expressed as an annual percentage.
• Loan Tenure: The period over which you repay the loan. Longer tenures reduce EMI but increase total interest paid.
• Processing Fee: A one-time fee charged by the lender to process your loan application, usually a percentage of the loan amount.
• EMI: Equated Monthly Installment, the fixed amount you pay each month, comprising both principal and interest.

Car Loan EMI Calculation Formula

The EMI for a car loan is calculated using the following formula:

EMI = [P × r × (1 + r)^n] / [(1 + r)^n - 1]

Where:

• P = Principal (Loan Amount)
• r = Monthly Interest Rate (Annual Rate ÷ 12 ÷ 100)
• n = Loan Tenure in Months

Tips for Car Loan Planning

• 20% Rule: Try to make a down payment of at least 20% of the car's value.
• 4-Year Guideline: Consider keeping your loan tenure to 4 years or less to minimize interest costs.
• 50% Income Rule: Your monthly car expenses (EMI, fuel, insurance, maintenance) should not exceed 15-20% of your monthly income.
• Compare Offers: Shop around for the best interest rates and terms from different lenders.
• Pre-payment Options: Check if your loan allows pre-payments without penalties to save on interest.