1. What is the EMI Formula?

The EMI (Equated Monthly Installment) is calculated using the standard loan amortization formula that considers the principal amount, interest rate, and loan tenure.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

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

Explanation: The formula calculates the fixed payment amount required each month to pay off the loan over the specified term, including both principal and interest components.

3. Current Car Loan Rates in India

Details: As of 2023, typical car loan rates in India range from 8% to 9% p.a. for new cars:

• SBI: 8.65% p.a.
• HDFC Bank: 8.00% p.a.
• ICICI Bank: 8.75% p.a.
• Axis Bank: 8.50% p.a.

Rates may vary based on credit score, loan tenure, and car model.

4. Using the Calculator

Tips:

• Enter loan amount in INR (minimum ₹10,000)
• Input annual interest rate (e.g., 8.65 for SBI's rate)
• Specify loan term in years (typically 1-8 years for car loans)
• Default values show SBI's current rate for 5-year term

5. Frequently Asked Questions (FAQ)

Q1: What factors affect car loan EMI?
A: Principal amount, interest rate, and loan tenure are the three main factors. Longer tenures reduce EMI but increase total interest paid.

Q2: What is the maximum car loan tenure in India?
A: Typically 7-8 years for new cars, shorter for used cars. Some lenders offer up to 10 years for electric vehicles.

Q3: Are there prepayment charges?
A: Most banks charge 2-5% for prepayment before tenure completion, though some offer free prepayment after 1 year.

Q4: What documents are needed for car loan?
A: Typically include ID proof, address proof, income proof, bank statements, and car quotation/invoice.

Q5: How to reduce EMI burden?
A: Options include making larger down payment, negotiating lower interest rate, or choosing shorter tenure.