How it works & FAQs
The math behind the numbers, plus answers to the questions we hear most often.
How is the car loan EMI calculated?
EMI uses the same reducing-balance formula: P × r × (1+r)ⁿ / ((1+r)ⁿ − 1). Car loans in India typically run 1–8 years. Shorter tenures mean higher EMI but lower total interest paid.
How much down payment should I make?
Most lenders finance 80–90% of the on-road price. A higher down payment reduces your loan amount, lowering both your EMI and total interest. A 20% down payment is a common starting point — it also signals lower risk to the lender, potentially getting you a better rate.
New car vs used car loan — what changes?
Used car loans carry higher interest rates (typically 1–3% above new car rates) and shorter maximum tenures (usually 5 years). Some lenders also cap the LTV (loan-to-value) for older vehicles. Always verify the actual on-road price vs. ex-showroom price before calculating.
Is car loan interest tax deductible?
Not for personal use vehicles. If the car is used for business purposes, the interest may be claimed as a business expense. Electric vehicle loans have a deduction of up to ₹1.5L under Section 80EEB.
Is the processing fee included in my EMI?
No. The processing fee is a one-time charge paid upfront at disbursal, typically 0.5–2% of the loan amount. We show it separately as "Upfront fee" so you can see the true all-in cost.