Car Loan Calculator

Ex-showroom is the advertisement, on-road is the bill

Every car advertisement in India carries an ex-showroom price, and no one has ever paid it. The number on the dealer’s quote sheet is on-road, and the gap between the two is the reason so many car loans are ₹1.5 lakh larger than the buyer expected.

What sits between ex-showroom and on-road:

• RTO road tax and registration. A state levy on the ex-showroom price, set by price band and fuel type. It runs from roughly 4 percent to about 20 percent depending on where you register. Karnataka and Tamil Nadu are among the steepest, Delhi and Gujarat among the gentler, and most states give electric cars a concession or a full waiver. Check your own state’s RTO slab; the dealer will have it on a printout.
• Insurance. First-year comprehensive cover, which the dealer bundles from a partner insurer. A quote from Policybazaar or your existing insurer is usually cheaper, and you are allowed to bring your own.
• Handling, logistics, FASTag, extended warranty, accessories. Handling charges are the line to argue over; several consumer courts have ruled against them. Extended warranty and accessories are not part of the car and do not need to be part of the loan.
• TCS. If the ex-showroom price is above ₹10 lakh, the dealer collects 1 percent as tax collected at source. It shows up in your Form 26AS and you claim it back in your ITR, so it is a cash-flow cost, not a real one.

On a ₹8.5 lakh ex-showroom hatchback, on-road in Bengaluru comes to roughly ₹10 lakh, which is why the calculator’s default starts there.

What the six boxes mean

On-road price. Type the total from the dealer’s price breakup, after any discount and before finance. Ask for the sheet in writing; a verbal “about ten lakh” hides a lot.

Exchange value of old car. What the dealer, Maruti True Value, Spinny or Cars24 will give you for the car you are handing over. The calculator takes it straight off the price, the same as cash. Note that a manufacturer’s “exchange bonus” of ₹10,000 to ₹30,000 is a discount that only applies if you exchange, so it belongs in the exchange value, not the on-road price.

Down payment. Your own cash. Banks fund 80 to 90 percent of on-road for a new car, and some advertise “100 percent funding”. Read that carefully: it almost always means 100 percent of the ex-showroom price, and the RTO, insurance and handling are still yours to pay on the day.

Interest rate. Banks lend to a 750-plus CIBIL borrower at somewhere in the high eights to low tens; the default is 9.5 percent p.a. reducing. Dealer-desk finance through an NBFC is convenient and typically a point or two higher, though a festive-season subvention from the manufacturer can flip that.

Tenure. Five years is the default. Seven is on offer almost everywhere now, and the section below is about why I would not take it.

Processing fee. A flat rupee amount. Banks charge either a flat fee or 0.5 to 1 percent of the loan, plus 18 percent GST. The calculator counts it in your total outflow but does not add it to the loan, which matches how most banks collect it.

₹10 lakh on-road, ₹2 lakh down: the full outflow

financed = on-road - exchange - down payment              = 8,00,000
EMI      = financed × i × (1+i)^n / ((1+i)^n - 1)         i = 9.5 / 1200, n = 60
outflow  = down payment + processing fee + EMI × n

Monthly EMI	₹16,801
Loan amount	₹8,00,000
Total interest	₹2,08,089
Total you will pay	₹12,13,089
Loan as share of on-road price	80%
Tenure	60 months

The ₹12,13,089 is the down payment, the ₹5,000 fee and sixty EMIs added up. A ₹10 lakh car costs ₹12.13 lakh before fuel, servicing, the second year’s insurance or a single tyre.

Tenure is the input that moves the total most, and it is the one the dealer will reach for first:

Tenure	Monthly EMI	Total interest
3 years	₹25,626	₹1,22,549
5 years	₹16,801	₹2,08,089
7 years	₹13,075	₹2,98,316

Seven years instead of five cuts the EMI by ₹3,726 and adds ₹90,227 in interest.

An exchange does the opposite. Hand over an old car worth ₹3 lakh and the loan falls to ₹5 lakh, the EMI to ₹10,501 and the interest to ₹1,30,056, with nothing else changed.

Flat rate, dealer finance and the seven-year loan

The dealer’s finance desk quotes a flat rate more often than not, because it sounds like half the number. At 9.5 percent reducing, the default loan’s interest works out to 5.20 percent flat. So a dealer offering “7 percent flat” over five years is charging roughly 12.5 percent reducing, well above what a bank would give you. Ask which basis a rate is on before you compare anything; the EMI calculator converts one to the other.

On the seven-year tenure: a car is the only thing most people borrow for that is worth less every month. A five-year-old hatchback fetches well under half its on-road price, and for a stretch of a seven-year loan the outstanding balance is higher than the car would sell for. That is fine if nothing happens. If the car is written off, the insurer pays the insured declared value, the bank takes its balance first, and you can end up paying EMIs on a car you no longer have. Five years, or a bigger down payment, keeps you on the right side of that line.

If the shortfall on the down payment is the problem, compare the cost of a small personal loan for the gap against stretching the car loan; the personal loan is dearer per rupee but shorter, and it does not put the car underwater.

Foreclosure charges, hypothecation and the leaflet’s quiet parts

Most bank car loans are fixed rate, and fixed-rate loans can carry a foreclosure charge: typically 3 to 5 percent of the outstanding plus GST, often falling to nil after 24 or 36 EMIs. RBI’s 2025 direction removing prepayment charges applies, from 1 January 2026, to floating-rate loans to individuals for non-business purposes. A fixed-rate car loan is outside it, so read the sanction letter for the exact clause before you plan to close early with a bonus.

The car’s RC will carry a hypothecation endorsement in the bank’s favour. When the loan closes, collect the NOC and Form 35 from the bank and get the HP removed at the RTO inside the NOC’s validity, which is usually 90 days. Miss that and you are back at the bank chasing a fresh NOC when you try to sell.

Insurance renewal is the other recurring cost the loan hides. Comprehensive cover on a ₹10 lakh car costs a meaningful amount every year, and a bank-funded car must stay comprehensively insured for the whole tenure; third-party only is not an option while the HP stands.

For a house rather than a car, the home loan calculator adds stamp duty and registration, which have no equivalent here.