₹10 Lakh Car and a 6-Year Loan: What Will Be the EMI, and How It Works

Kokila Chokkanathan
Introduction

Buying a car on loan is common today, especially for salaried individuals. But before taking a decision, it is important to understand how EMI (Equated Monthly Installment) is calculated and what the total cost of borrowing looks like over time.

Loan Scenario Assumption

Let’s assume:

  • Car price: ₹10,00,000
  • Loan amount: ₹10,00,000 (100% financing for simplicity)
  • Loan tenure: 6 years (72 months)
  • Interest rate: ~9% per annum (typical car loan rate in India)
Estimated EMI Calculation

Using standard EMI calculation:

👉 Monthly EMI ≈ ₹17,500 to ₹18,000

So, for a ₹10 lakh car loan over 6 years, you would typically pay around:

  • ₹17,800 per month (approx.)
Total Repayment Breakdown

Over 6 years:

  • Total EMI paid ≈ ₹12.8 lakh to ₹13.2 lakh
  • Interest paid ≈ ₹2.8 lakh to ₹3.2 lakh
So, although the car costs ₹10 lakh, the real cost after interest becomes around ₹13 lakh.

How EMI Is Calculated

EMI depends on three main factors:

1. Loan Amount

Higher loan = higher EMI

2. Interest Rate

Even a small change (8% vs 10%) significantly affects EMI

3. Loan Tenure

Longer tenure = lower EMI but higher total interest

Example Comparison

Tenure

EMI (approx.)

Total Interest

3 years

₹31,800

Lower

6 years

₹17,800

Higher

So, longer loans reduce monthly burden but increase total cost.

Is a 6-Year car Loan Good?

Advantages

  • Lower monthly EMI
  • Easier for salaried budget planning
  • Better cash flow management
Disadvantages

  • Higher total interest paid
  • Longer financial commitment
  • Car value depreciates faster than loan repayment
Conclusion

A ₹10 lakh car loan over 6 years typically results in an EMI of around ₹17,500–₹18,000 per month, with total repayment crossing ₹13 lakh. While it makes car ownership affordable monthly, it is important to balance EMI comfort with overall interest cost before deciding.

 

Disclaimer:

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.

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