Planning a Car Loan? Compare ₹5 Lakh, ₹7 Lakh & ₹10 Lakh EMI Options

Buying a car can be an exciting milestone, and for many, a car loan can make it possible. Whether you’re eyeing a budget-friendly hatchback or a compact SUV, understanding your monthly EMI (Equated Monthly Installment) obligation is key to making an informed decision. In this article, we’ll break down the EMIs for car loans of ₹5 lakh, ₹7 lakh, and ₹10 lakh at a 10% annual interest rate over a 5-year (60-month) term. 

EMI Breakdown for ₹5 Lakh, ₹7 Lakh, and ₹10 Lakh Car Loans 

EMI for ₹5 Lakh Car Loan 

If you’re going for an entry-level vehicle or making a large down payment, a ₹5 lakh loan might be enough. At 10% interest for a 5-year period, the monthly EMI comes to around ₹10,624. 

• Total Interest Outgo: ~₹1,37,411 

• Total Repayment Amount: ~₹6,37,411 

This EMI can be manageable for those with a monthly income of ₹50,000 to ₹60,000, provided there aren’t too many other EMIs or expenses in your budget. 

EMI for ₹7 Lakh Car Loan 

Planning for a mid-range vehicle or adding some accessories and insurance to the cost? A ₹7 lakh loan would be more suitable. At 10% interest over 5 years, the monthly EMI is about ₹14,873. 

• Total Interest Outgo: ~₹1,92,376 

• Total Repayment Amount: ~₹8,92,376 

This EMI could work well if your monthly income is between ₹70,000 and ₹80,000, depending on your other financial commitments. 

EMI for ₹10 Lakh Car Loan 

For higher-end models or if you prefer not to make a big down payment, a ₹10 lakh loan may be what you’re looking at. The monthly EMI in this case would be roughly ₹21,247. 

• Total Interest Outgo: ~₹2,74,823 

• Total Repayment Amount: ~₹1,274,823 

This option is generally suitable for individuals with a monthly income of ₹1 lakh or more, especially if you want to maintain financial comfort and meet other obligations. 

When comparing car loans of ₹5 lakh, ₹7 lakh, and ₹10 lakh at 10% interest for a 5-year term, the difference in EMIs and total repayment becomes quite evident.  

A ₹5 lakh loan results in an EMI of around ₹10,624 with a total repayment of ~₹6.37 lakh, while a ₹7 lakh loan increases the EMI to ₹14,874 and the repayment to around ₹8.92 lakh. Opting for a ₹10 lakh loan pushes the EMI to ₹21,249, with a total repayment nearing ₹12.75 lakh.  

While higher loan amounts offer the flexibility to choose better car models or reduce the upfront cost, they also lead to a significantly larger interest outgo. Hence, borrowers should choose a loan amount based on their repayment capacity, monthly income, and overall financial goals. 

You can use an EMI Calculator to calculate your loan EMIs for various instances.  

Things to Consider Before Choosing a Loan Amount 

• Your Monthly Income and Expenses: Before deciding on the loan amount, calculate how much EMI you can afford. Ideally, all your EMIs combined (including existing loans) should not exceed 40% of your net monthly income. 

• Down Payment Options: The higher the down payment, the lower the EMI and interest you’ll pay over time. Try to pay at least 20-30% of the car’s value upfront if possible. 

• Total Interest Paid: It’s easy to focus only on the EMI, but it’s also important to factor in the total interest paid over the loan tenure. A longer tenure reduces the EMI but increases the interest outgo. 

• Car-Related Expenses: Your EMI isn’t the only recurring expense. Remember to account for fuel, insurance, periodic maintenance, and registration fees in your budget planning. 

Also Read: What Should Be Your EMI If You Earn ₹50,000 Per Month? 

Should You Opt for a 5-Year Term? 

A 5-year term is a popular choice because it offers a good balance between manageable monthly payments and total interest paid. If you can afford a slightly higher EMI, going for a shorter term (like 3 years) can save you a significant amount on interest. On the other hand, if you want a lower EMI and are okay with paying more interest, you can consider a 6, 7-year or more than that as loan term. 

Conclusion 

Choosing the right car loan depends on your income, down payment capacity, and monthly financial commitments. By evaluating these factors carefully, you can drive home your dream car without straining your finances. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.