Car Loan EMI Calculator
Calculate your car loan monthly instalment. Compare interest rates for new and used vehicle loans and view the complete amortization schedule.
Car Loan Interest Rates in India (2026)
Rates vary by lender, credit score, and whether the vehicle is new or used. New car loans are priced 1.5–3% cheaper than used car loans because the asset depreciates less risk for the bank.
| Lender | New Car Rate | Used Car Rate | Max Tenure |
|---|---|---|---|
| SBI Car Loan | 8.75% | 10.25% | 7 years |
| HDFC Bank | 8.85% | 11.50% | 7 years |
| ICICI Bank | 8.90% | 11.75% | 7 years |
| Axis Bank | 9.00% | 12.00% | 7 years |
| Kotak Mahindra | 8.99% | 12.50% | 5 years |
* Rates are indicative for April 2026 and may vary based on credit score, income, and lender discretion.
How Down Payment Affects Your Car Loan
Banks finance 80–90% of the on-road price for new cars and 60–75% for used cars. A higher down payment directly reduces your EMI and the total interest you pay over the entire loan tenure. The table below shows the impact for a ₹12 lakh car at 9% for 5 years.
| Down Payment | Loan Amount | Monthly EMI | Total Interest Paid |
|---|---|---|---|
| 10% (₹1.2L) | ₹10.8L | ₹22,399 | ₹2,63,940 |
| 20% (₹2.4L) | ₹9.6L | ₹19,910 | ₹2,34,600 |
| 30% (₹3.6L) | ₹8.4L | ₹17,421 | ₹2,05,260 |
| 40% (₹4.8L) | ₹7.2L | ₹14,933 | ₹1,75,980 |
Increasing your down payment from 10% to 30% saves ₹58,680 in interest over 5 years - without changing anything else.
Tips to Get the Lowest Car Loan Rate
- →Maintain a CIBIL score above 750. Banks offer their best rates to borrowers with excellent credit history. A score below 700 can add 1–2% to your rate.
- →Negotiate the on-road price first. Never discuss financing until you have the best price locked in. Dealers make commission on loans and may inflate the price to offset.
- →Compare bank rates before accepting dealer financing. Dealerships typically partner with one or two banks and add a 0.5–1% margin. Your own bank may offer a better rate.
- →Choose shorter tenure if the EMI is manageable. A 3-year loan saves ₹40,000–₹60,000 in interest compared to a 5-year loan on a ₹10L car.
- →Check for pre-closure charges. RBI mandates nil foreclosure charges on floating-rate loans. For fixed-rate car loans, banks may charge 2–5%. Factor this in if you plan to prepay.
Frequently Asked Questions
What is the typical car loan interest rate in India?
Car loan interest rates range from 8.5% to 12% in 2026. New car loans are cheaper (8.5–10%) while used car loans are more expensive (11–14%). SBI, HDFC, and ICICI offer competitive rates.
What is the maximum tenure for a car loan?
Most banks offer car loans for 1 to 7 years. A 5-year tenure is the most common and provides a good balance between EMI affordability and total interest paid.
How much down payment should I make for a car?
Banks finance up to 80-90% of the car price. You need to pay 10-20% as down payment. A higher down payment reduces your EMI and total interest. Aim for at least 20% down.
Is it better to buy a car with a loan or pay cash?
If you have the cash, paying outright saves you 15-30% in interest costs over the loan tenure. However, if the money can earn 12%+ returns (via equity MFs) while the car loan costs 9%, the math might favor investing and taking the loan.