Car Loan

Car Loan EMI Guide

A car loan works on the same EMI principles as any other loan, but a car is a depreciating asset — unlike a home, its value drops the moment you drive it out. That changes how you should think about tenure, down payment, and total cost.

Typical car loan structure

Why tenure matters more for cars than homes

A home tends to hold or grow in value over time, so a longer loan tenure isn't necessarily risky from an asset perspective. A car depreciates quickly — often 15–20% in the first year alone. Combine a long tenure with rapid depreciation, and you can end up "underwater" — owing more on the loan than the car is worth — for a chunk of the loan's life.

A good rule of thumb: keep your car loan tenure as short as comfortably possible, ideally under 5 years. A car loan stretched to 7 years to lower the EMI often means paying significant interest on an asset that's lost much of its value long before the loan ends.

Down payment: more is usually better here

Unlike a home loan (where a bigger down payment is a trade-off against liquidity), a larger down payment on a car loan more directly protects you — it reduces the loan amount on a fast-depreciating asset, lowers your EMI, and reduces the risk of owing more than the car's resale value.

New car vs used car loan considerations

FactorNew CarUsed Car
Interest rateLowerHigher
Max tenureUsually longerUsually shorter
Financing %Higher (80-90%)Lower (70-80%)

Before you sign

Calculate your car loan EMI

Use the Car Loan tab in the calculator to see your EMI, total interest, and payment breakup for different tenures.

Open the EMI Calculator