Car Loan EMI Calculator

A car loan runs the opposite way to a home loan. A house is usually worth more each year than the debt against it; a car is worth less almost at once, and for the early part of the term you owe more than it would fetch. That gap has a name — negative equity — and it is the thing car loan calculators never show, even though it is the one that costs people money. If the car is written off in year two, the insurer pays what the car is worth, not what you owe. The difference is yours to find, on a car you no longer have. This page works out the instalment, and then how long that gap lasts and how wide it gets.

How to use it

1. Enter the ex-showroom price and what registration, road tax and insurance add on top. That total is the on-road price.
2. Enter your down payment and the share of the ex-showroom price your lender will fund. Most fund 80 to 90 percent, and almost none fund the registration or insurance.
3. Set the rate and the tenure.
4. Adjust the depreciation if you know your model holds value unusually well or badly. Year one is always the steepest.
5. Read the negative equity figure. If it is zero, a write-off would clear the loan at any point. If it is not, that is how many months you are exposed.

Examples

• An 8 lakh car with 1.5 lakh down over 5 years: 14,281 a month, and never worth less than the loan
• The same car fully financed over 7 years: 13,075 a month, but underwater for 43 months and 75,481 short at the worst point

Frequently asked questions

How much down payment should I make on a car?

Enough that you are never underwater, and this page will tell you what that is for your car. As a rule the ceiling a lender sets already does most of the work: fund 85% of the ex-showroom price and put down the rest, and the loan generally stays behind the car's value for the whole term. It is the zero-down and fully-financed deals that create the exposure, because the loan starts at the full price while the car is worth less than that the moment it is registered. Try your own figures both ways above — the difference is usually larger than the down payment itself.

What is negative equity on a car loan?

It is owing more than the car is worth. It happens because the loan comes down in a straight-ish line while the car's value falls fastest at the start — commonly a fifth in the first year alone. While the gap is open, two things hurt: an insurance write-off pays market value and leaves you owing the rest, and selling the car means finding cash to close the loan before you can transfer it. The gap narrows as the loan amortises and the depreciation slows, and this page shows the month it closes and the worst point before it does.

Is a 7-year car loan a bad idea?

Usually, and the reason is visible above rather than a matter of opinion. The long tenure lowers the instalment, which is why it is offered, but it keeps the balance high while the car keeps falling — on a fully financed car it can leave you underwater for three years or more, which covers most of the period people actually keep a car. You also pay considerably more interest for a thing that is worth less at the end. If the seven-year instalment is the only one that fits, that is generally a signal about the car rather than about the tenure.

Does the loan cover registration and insurance?

Rarely. Lenders size the loan against the ex-showroom price, while the registration, road tax and first year's insurance sit on top — commonly around a tenth of the price again — and are payable in cash on the same day. This is why the drive-away figure surprises people even when they have budgeted for the down payment. The cash figure on this page adds them together so the number you see is the money that actually has to leave your account.

Should I take the dealer's finance or my bank's?

Compare the total, not the instalment. Dealer finance is sometimes genuinely cheaper because the manufacturer is subsidising the rate to move stock, and sometimes it is a higher rate wrapped in a longer tenure so the monthly figure looks lower. Put both into this page at their real rate and tenure and read the total interest. Also check the processing fee and any prepayment charge, since a subsidised rate with a punitive foreclosure clause is a poor deal if you intend to clear it early.

Is it better to buy a car outright or on loan?

Outright costs less in absolute terms, because you pay no interest, and it removes the negative equity question entirely — you can sell or write off the car at any time without owing anyone. The argument for the loan is that it leaves your savings intact for things that earn a return or cover an emergency. That argument only holds if the money genuinely stays invested; if it goes on the car anyway a year later, the loan was simply a more expensive way to buy the same car.