Car Loan EMI Calculator 2026: EMI, On-Road Price, Affordability and Hidden Costs in One Place
Work out your EMI and the real cost of the car, check how much car you can afford, expose dealer “flat rate” offers, compare two loans and see what prepaying saves.
- Rates: new car loans start at about 7.45%–9% a year in November 2026, but most borrowers pay 0.5–1% more than the advertised rate.
- Rule of thumb: pay at least 20% down, borrow for 4 years or less, and keep all car costs under 10–15% of your monthly income.
- Watch out: a dealer’s “7% flat rate” is really about 12.5% on a 5-year loan. Always ask for the reducing-balance rate and the APR.
- GST: small petrol, CNG and diesel cars now carry 18% GST and bigger ones 40%, after the September 2025 GST changes. Electric cars stay at 5%.
Car loan EMI calculator: pick what you want to work out
This car loan EMI calculator has six tools. They all run in your browser and update as you type. Nothing you enter is sent anywhere.
1. Choose a calculator
2. Enter your numbers
Car loan EMI and total cost
Enter the on-road price and your down payment. Not sure of the on-road price? Use the “On-road price” tool first.
See year-by-year repayment
| Year | EMIs paid | Principal | Interest | Balance left |
|---|
On-road price estimator
The price you pay is more than the ex-showroom price. Road tax and insurance alone can add 12–20%. Check your state’s road tax rate and the dealer’s insurance quote, then edit the numbers.
How much car can I afford?
Based on the popular 20/4/10 rule: 20% down, a loan of 4 years or less, and total car costs (EMI, fuel, insurance, upkeep) within 10% of your income. A looser 15% limit is shown as the stretch option.
Flat rate vs reducing rate check
Some dealers and lenders quote a flat rate, where interest is charged on the full loan for the whole tenure even as you repay it. It sounds cheap, but the real (reducing-balance) rate is almost double.
Compare two car loan offers
A lower rate with high fees can cost more than a slightly higher rate with no fees. Enter both offers for the same loan amount.
| Offer A | Offer B |
|---|
Prepay or foreclose your car loan
Paying early saves interest, but many car loans charge 3–6% on the amount you prepay, especially fixed-rate loans in the first 1–2 years. This shows whether it is still worth it.
How the car loan EMI calculator works out your EMI
Banks use the reducing-balance method, and so does this car loan EMI calculator: each month’s interest is charged only on what you still owe.
EMI = P × r × (1 + r)n ÷ ((1 + r)n − 1), where P is the loan amount, r is the yearly rate divided by 12 and n is the number of months.
For example, a ₹10 lakh car with ₹2 lakh down leaves an ₹8 lakh loan. At 8.75% for 5 years the EMI is ₹16,510. You repay about ₹9.91 lakh, so the loan costs about ₹1.91 lakh in interest. Stretch it to 7 years and the EMI drops to ₹12,770, but the interest climbs to about ₹2.73 lakh.
Car loan interest rates in November 2026
The RBI raised the repo rate to 5.50% on 7 October 2026 (what that means for your EMIs), so floating car loan rates are drifting up. These are the lowest advertised new-car rates; your rate depends on your CIBIL score, income, the car and the tenure.
| Bank | New car loan rate (from) |
|---|---|
| Canara Bank | 7.45% (electric), 7.50% (others) |
| Union Bank of India | 7.50% |
| Bank of Baroda | 7.60% floating, 8.50% fixed |
| Punjab National Bank | 7.60% floating, 8.60% fixed |
| Federal Bank | 7.85% |
| HDFC Bank | 8.15% |
| ICICI Bank | 8.35% |
| State Bank of India | 8.80% |
| Axis Bank | 8.95% |
| Kotak Mahindra Bank | 9.00% |
Source: BankBazaar, rates as of October 2026, updated 1 November 2026. Several banks are running festive offers with fee waivers until December; check the bank’s Key Fact Statement for the final rate and APR.
The flat rate trap, explained
A flat rate charges interest on the original loan every year, even though you repay part of it each month. A reducing rate, which banks use, charges interest only on what you still owe. That is why a flat rate of 7% on a 5-year loan works out to about 12.5% on a reducing basis: on ₹8 lakh, you’d pay ₹2.8 lakh in interest instead of about ₹1.9 lakh at a fair 8.75%.
Ask these three questions before signing: Is this a reducing-balance rate? What is the APR including all fees? What does it cost to prepay or close the loan early? Lenders must give you a Key Fact Statement that answers all three.
GST and on-road price: what you actually pay
Since 22 September 2025, cars carry a single GST rate with no extra cess. Small cars (petrol, CNG or LPG up to 1,200 cc and diesel up to 1,500 cc, under 4 metres long) pay 18%. Larger cars and SUVs pay 40%, and electric cars pay 5%. GST is already inside the ex-showroom price.
On top of the ex-showroom price you pay road tax (set by each state, roughly 4–15% and often higher for pricier or diesel cars), first-year insurance, registration and FASTag. Accessories and extended warranties are optional, however much the dealer insists. Many states charge little or no road tax on electric cars.
7 ways to pay less for your car loan
- Put down more. Every ₹1 lakh extra down on a 5-year loan at 8.75% saves about ₹24,000 in interest.
- Keep the tenure short. A car loses value fast. Paying it off in 3–5 years keeps you from owing more than the car is worth.
- Check your CIBIL score first. A score above 750 gets you near the advertised rate; lower scores can add 1–3%.
- Get quotes from your own bank. Banks where you hold a salary account often beat dealer-arranged finance.
- Compare APR, not the headline rate. Use the “Compare 2 loans” tool in the car loan EMI calculator above to include processing fees.
- Prefer a floating rate if you might prepay. Banks can’t charge individuals for prepaying floating-rate loans; fixed-rate loans often carry 3–6% charges.
- Skip what you don’t need. Bundled insurance, accessories and add-ons are often cheaper elsewhere and inflate your loan.
Car loan or pay cash?
🚗 Take a loan if
- The loan rate is close to what your savings earn after tax
- Paying cash would empty your emergency fund
- You can keep the EMI under 10–15% of take-home pay
💵 Pay cash if
- The money is sitting in a savings account or FD earning less than the loan rate
- Your income is irregular and an EMI would be a strain
- You’d need a 7-year loan to afford the car
Keeping money in an FD instead? Our FD calculator shows what it earns after tax, so you can compare it with the loan rate.
Car loan FAQs
How is car loan EMI calculated?
With the reducing-balance formula EMI = P × r × (1 + r)^n ÷ ((1 + r)^n − 1), where P is the loan, r the monthly rate and n the number of months. An ₹8 lakh loan at 8.75% for 5 years has an EMI of about ₹16,510.
What is a good car loan interest rate in 2026?
In November 2026 the lowest advertised new-car rates are about 7.45%–9%. With a CIBIL score above 750, anything under about 9% from a bank is a reasonable deal. Used car loans usually cost 2–5% more.
How much down payment should I make on a car?
At least 20% of the on-road price. Many banks lend up to 90–100% of the ex-showroom price, but a bigger down payment cuts your EMI and interest and stops you owing more than the car is worth.
What is the 20/4/10 rule for buying a car?
Pay at least 20% down, take a loan for 4 years or less, and keep total car costs, including EMI, fuel and insurance, under 10% of your monthly income.
Can I prepay my car loan?
Yes. Banks can’t charge individuals a penalty for prepaying floating-rate loans. Fixed-rate car loans often charge 3–6% of the amount prepaid, especially in the first one or two years. Check the prepayment calculator above to see if it still saves money.
Is a 7-year car loan a good idea?
Usually not. The EMI is lower, but you pay much more interest and may owe more than the car is worth for years. A 7-year loan on ₹8 lakh at 8.75% costs about ₹82,000 more in interest than a 5-year one.
What is the GST on cars in 2026?
18% for small cars (petrol up to 1,200 cc, diesel up to 1,500 cc, under 4 metres), 40% for larger cars and SUVs, and 5% for electric cars. These rates have applied since 22 September 2025, with no extra compensation cess.
This calculator gives estimates for information only and is not financial advice. Actual EMIs, rates and charges depend on the lender; always read the Key Fact Statement before you sign.
Sources
BankBazaar: Car loan interest rates (Nov 2026) · MotoMotar: Car loan fees and foreclosure charges · Daily Financial: Festive loan offers 2026 · PSU Connect: RBI repo rate hike to 5.50%
Calculations by WellthRise. Updated 1 November 2026 by the WellthRise Editorial Team.
We write practical guides on money, tax, salary, wellness and India news. Rates, rules and dates come from official sources such as RBI, SEBI, the Income Tax Department, India Code and government notifications, linked in each article with the date we last checked them. We don’t accept payment to change what we write.
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