🚗 Auto 💰 Finance Last tested2026-07-01
Car Loan EMI Calculator.
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Quick answer
A 25,000 car with 20% down at 9% for 5 years = a 20,000 loan costing about 415/month, with total interest of roughly 4,910. Shortening to 3 years drops interest to ~2,880.
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Car Loan EMI
$
%
$5,000 upfront → loan of $20,000
%
Monthly EMI
$415
for 60 months
Total Interest
$4,910
cost of borrowing
Total Cost of Car
$29,910
down payment + all EMIs
Loan balance by year end
Y1
Y2
Y3
Y4
Y5
Outstanding principal remaining after each year of EMIs.
✨ Live · Reducing-balance EMI. Insurance, registration & processing fees not included.
AR
Reviewed by
CFP® with 12+ years in mortgage & retirement planning.
💡 Insights
3 rules before you sign.
2️⃣0️⃣
20/4/10 rule
20% down, max 4-year loan, total car costs under 10% of gross income. If the numbers don't fit, the car doesn't fit.
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Ask "flat or reducing?"
A 7% flat rate ≈ 12.5–13% reducing-balance. Dealers quote flat because it looks cheap. This calculator uses honest reducing-balance.
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Depreciation is the real cost
A new car loses ~15–20% of value in year one — often more than the interest. A bigger down payment keeps you above water.
❓ FAQ
Common questions.
How is car loan EMI calculated?
Car loans use the standard reducing-balance EMI formula: EMI = P × r × (1+r)ⁿ ÷ ((1+r)ⁿ − 1), where P is the loan amount (price minus down payment), r is the monthly rate (annual ÷ 12), and n is the number of months. A $20,000 loan at 9% for 5 years works out to about $415/month.
What is a good down payment for a car?
A common rule is 20% for a new car and 10% minimum for used — enough to cover the instant depreciation that happens the moment you drive off, so you are never "underwater" (owing more than the car is worth). A larger down payment also reduces total interest and can qualify you for a better rate.
What car loan tenure should I choose?
Shorter is cheaper: at 9%, a 5-year loan costs roughly 60% more total interest than a 3-year loan on the same amount. Longer tenures (6–8 years) lower the monthly EMI but you pay interest for longer and risk owing more than the car is worth mid-loan. The sweet spot for most buyers is 3–5 years.
Do car loans use flat or reducing-balance interest?
Bank car loans are usually reducing-balance (interest charged on outstanding principal), which is what this calculator uses. Some dealers and NBFCs quote a "flat rate" that looks lower but is charged on the full original amount for the whole tenure — a 7% flat rate roughly equals a 12.5–13% reducing rate. Always ask which one is being quoted.
What is the 20/4/10 rule for buying a car?
A popular affordability guideline: put at least 20% down, finance for no more than 4 years, and keep total monthly vehicle costs (EMI + insurance + fuel) under 10% of your gross monthly income. It keeps the car from crowding out savings and other goals.