1. What is Car Loan Amortization?

Car loan amortization is the process of paying off your auto loan with regular payments over time. Each payment covers both principal and interest, with the interest portion decreasing and principal portion increasing over the loan term.

2. How Does the Calculator Work?

The calculator uses the standard EMI formula:

Where:

• \( P \) — Principal loan amount (₹)
• \( r \) — Monthly interest rate (annual rate divided by 12)
• \( n \) — Loan term in months
• \( PMT \) — Monthly EMI payment (₹)

Explanation: The formula calculates the fixed monthly payment required to fully repay the loan over its term, accounting for compound interest.

3. Current Car Loan Rates in India

Sample Rates (2024):

• SBI: 8.65% p.a. and above
• HDFC Bank: 8% p.a. and above
• ICICI Bank: 8.25% p.a. and above
• Axis Bank: 8.50% p.a. and above

Note: Actual rates vary based on credit score, loan term, and vehicle type.

4. Using the Calculator

Tips: Enter loan amount in ₹, annual interest rate in percentage, and loan term in years (1-7 years typical for Indian car loans).

5. Frequently Asked Questions (FAQ)

Q1: What is the typical car loan term in India?
A: Most Indian banks offer car loans for 1-7 years, with 5 years being the most common term.

Q2: Are there prepayment charges?
A: Many banks charge 2-5% prepayment penalty if you close the loan early, though some offer free prepayment after a certain period.

Q3: What is the maximum loan-to-value ratio?
A: Typically 85-90% of the ex-showroom price for new cars, 70-80% for used cars.

Q4: What documents are needed?
A: Usually include KYC documents, income proof, address proof, and car quotation/invoice.

Q5: Can I get tax benefits on car loans?
A: No, unlike home loans, car loans don't offer tax benefits under current Indian tax laws.