Car loans use the same EMI formula as home loans but run over shorter tenures (1–7 years) at higher interest rates. Since cars depreciate quickly, keeping the loan tenure short saves money on interest on a depreciating asset.
About the Car Loan EMI Calculator
For a ₹8 lakh car loan at 9.5% for 5 years, total interest is about ₹2 lakhs. Reducing the tenure to 3 years saves ₹65,000 in interest. Always compare the total cost of the loan, not just the monthly EMI.
Formula used:
Frequently Asked Questions
What tenure is sensible for a car loan?
Most financial advisors cap it at 5 years. Cars depreciate 15–20% in year one; paying interest for 7 years on a depreciating asset erodes value fast.
New vs used car loan interest rates?
Used-car loans typically carry 2–4% higher rates than new-car loans and have shorter maximum tenures.