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Car Loan EMI Calculator

Written by - Deepak

February 7, 2022 6 minutes


India is one of the leading markets in the world for automobiles. Despite the huge slump in the overall industry in the wake of the covid pandemic, or the ever-increasing fuel prices, we all know that the demand will never completely go away. Also, we can see some recovery in the industry backed by the improved purchasing power of the consumers.

However, for many people even today, buying a car without external financing is quite difficult. This financial assistance has to be repaid within the tenure in fixed installments.

Given below are the details of repayment of such external financing options and the use of a car loan EMI calculator to ease the process. 

What is a car loan EMI?

A car loan is a loan that can be taken to purchase a new car or a second-hand car. This loan belongs to a mid-term loan segment where the tenure is anywhere between 5 to 10 years approximately at a relatively lower interest rate as compared to other loans like personal loans. The repayment for this loan is in the form of monthly payments known as EMI (Equated Monthly Installments) over the tenure of the loan. Some banks also allow the borrowers to prepay their loan after paying the initial minimum EMIs by paying the outstanding balance in a lump sum provided it is allowed as per bank regulations. Borrowers have to pay a nominal amount in the form of interest on the outstanding balance for such prepayment. 

What is the formula for calculating car loan EMI?

Like any other EMI, the components for calculating the car loan EMI are the three basic inputs given below.

  1. Loan amount
  2. Tenure of loan
  3. Rate of interest

The mathematical formula for calculating car loan EMI using the above parameters is given hereunder.

EMI = P x r x {(1+r)^n/ [(1+r)^n-1]}

In the above formula, 

P is the loan amount given by the lender.

r is the rate of interest charged by the lender for the loan. It is represented in the form of a per month rate and not an annual rate. Therefore, r is calculated as r/12/100.

n is the tenure of the loan and it is represented as the total number of months in the tenure (for example, tenure of 5 years is represented as 60 months in the above formula).

Let us consider an example to understand the above formula. 

Mr. A has purchased a car using a loan of Rs. 6,00,000 from XYZ bank at the rate of 7% per annum for a tenure of 4 years. The EMI in this example will be calculated as,

EMI = 600000 * 0.005833 * {(1+0.005833)^48 / [(1+0.005833)^48 – 1]}

EMI = Rs. Rs. 14,368

The above EMI will have to be paid by Mr. A in 48 months at the predetermined date. The amount will be auto-debited from the borrower’s bank account on such date or EMIs can be paid through PDCs (post-dated cheques).

What is a car loan EMI calculator?

The above formula is quite complex and therefore may be difficult for an average borrower to understand. Also, it is quite time-consuming and may also lead to errors. To ease this process, most lenders and customer awareness websites have the car loan EMI calculator tool. This is an automated tool is free of cost and can be used multiple times to calculate the EMI that will have to be paid based on the three parameters mentioned above. 

How to use the Fisdom car loan EMI calculator?

Users can get the car loan EMI calculator tool on the website of Fisdom . This tool is available on the homepage of the website under the tab ‘Resources’. Users have to provide the following inputs to calculate the car loan EMI that they need to pay towards the repayment of the loan taken. 

  1. The amount of loan
  2. The prevailing rate of interest
  3. The tenure of the loan

After putting in the above data, users will immediately get the EMI amount displayed on their screen. Along with the EMI amount, users can also know the total interest that they will pay during the tenure of the loan. This tool can also be quite useful in comparing the various loan options from different lenders. Users can then opt for the loan where the EMI expense is the lowest and other loan criteria are suitable to the borrower. 

Why is the car loan EMI calculator important?

The car loan EMI calculator is a very handy tool that helps potential borrowers calculate the amount of EMI that they need to pay on the loan. The key advantages of this tool are mentioned below.

  1. This tool is free of cost and can be used multiple times.
  2. It is a time-saving tool and easy to understand for any borrower.
  3. Borrowers can get 100% accurate results from this calculator which helps them in decision-making.


Car loan EMI calculators are an essential tool for every borrower so they can get a fair idea of the EMI expense on their car loan every month and thereby plan their finances accordingly.


1. What is the average interest rate for car loans currently?

The average rate of interest on car loans currently is around 7% approximately.

2. Can the car loan EMI calculator be used for all types of vehicles?

Yes. Car loan EMI calculator can be used for all types of cars (personal or commercial, new cars, or second-hand cars) as well as other vehicles.

3. Can a car loan EMI calculator provide the amount of interest that will have to be paid for the tenure of the loan?

Car loan EMI calculator provides information regarding the amount of EMI payable each month. Borrowers can get information about the interest on their loan by simply adding all the EMIs payable and reducing the original amount of the loan from the total. The resultant amount is the total interest charged on the loan. 

4. Can car loans be taken at the showroom or only at the designated branches of the bank?

Car loans are available directly with the dealers at the car showroom or by approaching any lender for the same.

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