On-road price, CIBIL score, and the 20-10-4 check.
Enter the on-road price (not the ex-showroom figure), your CIBIL score band, and tenure. This calculator uses the reducing-balance EMI method banks actually use, then checks it against India's own 20-10-4 affordability rule.
Ex-showroom + insurance + road tax + registration \u2014 not the brochure price
Typical: 10–20% of on-road price
36–60mo recommended
For the 20-10-4 check
Monthly EMI
₹14,841
per month \u00b7 60 months \u00b7 8.70% p.a. (reducing balance)
Loan Amount
₹7,20,000
Total Interest
₹1,70,484
Total Paid
₹10,70,484
Loan Breakdown
Car loan pricing in India runs on two parallel tracks: public-sector and private banks compete hard for prime borrowers, while NBFCs (non-banking finance companies) pick up everyone else at a real premium. As of 2026, PSU banks like Union Bank of India (7.40%), Canara Bank (7.45%), and Punjab National Bank (7.55%) advertise the lowest starting rates, with private banks HDFC Bank (from 8.15%) and ICICI Bank (from 8.40%) close behind. NBFCs such as Bajaj Finance price new-car loans from 10-14% plus a 2% processing fee, but approve applicants that banks turn down.
Your CIBIL score decides which of these you actually qualify for: SBI's published tiers show 8.70% for a score of 750 and above, rising to 8.90% for 721-756, and 9.65-9.85% for 650-720 — a difference of over a full percentage point between a good score and a merely fair one.
Loan tenure in India can run up to 7 years, but most advisors recommend capping it at 3-5 years: cars depreciate fast, and a 7-year loan risks leaving you owing more than the car is worth well into the loan's life.
A separate trap to watch for, especially with used-car dealers: some still quote a “flat rate” (for example, “8% flat”), which sounds lower than a bank's rate but works out to nearly double that — roughly 14-15% — once converted to the reducing-balance method banks actually use. Always confirm any quoted rate is reducing-balance, and if it isn't, convert it before comparing.
India has its own version of the affordability thumb rule international readers may know as 20/4/10 — here it's usually called the 20-10-4 rule, and the order of the numbers matters: put down 20% of the on-road price, keep your EMI at or under 10% of your net (take-home) monthly salary, and cap the loan tenure at 4 years. It's stricter than what banks themselves will actually approve — lenders commonly allow total loan obligations (EMI plus any existing debt) up to 50-75% of income depending on income band, under a metric called FOIR (Fixed Obligation to Income Ratio). That gap matters: a bank approving you for a much higher EMI than the 20-10-4 guideline suggests doesn't mean it's a comfortable monthly commitment, only that it clears the bank's own risk threshold.
One number trips up more Indian car buyers than any interest rate: the difference between the ex-showroom price advertised everywhere and the on-road price you actually finance. Ex-showroom price is the manufacturing and dealer cost including GST, but excludes registration, road tax, and insurance — all mandatory to legally drive the car, and all added on top. Road tax and registration charges vary by state, so the same car's on-road price can differ by tens of thousands of rupees depending on where you register it. Most banks calculate your loan-to-value against the on-road price (SBI, for instance, finances up to 90% of it), which is why this calculator asks for on-road price directly rather than the ex-showroom figure from the brochure.
Around four in five new-car buyers in India finance rather than pay cash, split fairly evenly between PSU banks, private banks, and NBFCs. Manufacturer-tied finance desks at Maruti Suzuki, Hyundai, and Tata showrooms sometimes offer subsidized rates as low as 7.99% for well-qualified buyers — worth checking before you approach your own bank. Whichever lender you choose, ask about the processing fee (often 0.25-2% of the loan amount) and prepayment or foreclosure charges upfront; many PSU banks waive these after a lock-in period, while some NBFCs charge them for the full tenure.
10%
20-10-4 rule: EMI ceiling (% of net salary)
10–20%
Typical minimum down payment (new car)
7.4–9.85%
2026 PSU/private bank new-car rate range
Priya earns a net take-home salary of ₹85,000 a month and wants a car with an on-road price of ₹9 lakh. With a CIBIL score of 760, she qualifies for roughly 8.70% at a PSU bank. Putting down ₹1.8 lakh (20%) and financing ₹7.2 lakh over 5 years, her EMI comes to around ₹14,800 — about 17.4% of her net salary, above the 20-10-4 guideline's 10% ceiling even though her bank would likely still approve it under its own FOIR rules. Shortening the tenure to 4 years raises her EMI further; stretching it to 7 years brings the EMI down to roughly ₹11,600, but adds well over ₹1 lakh in extra interest over the life of the loan compared with the 5-year term.
Used cars follow a noticeably different set of rules than new ones. Down payments run higher — typically 15-30% versus 10-20% for new cars — and interest rates jump too: SBI's Certified Pre-Owned scheme runs 10.45-15.60% against 8.70-9.85% for new cars, and most lenders will not finance a used car past a certain total age (commonly 8-10 years including the loan tenure). A 5-year-old car, for example, might only qualify for a 3-4 year loan rather than the 7 years available on a new one, since the lender wants the loan to finish well before the car becomes hard to resell. Getting the vehicle professionally valued before applying — rather than relying on the seller's asking price — also affects how much a bank is willing to lend against it.
Non-Resident Indians face a different structure rather than a locked door. Most major banks, including SBI, offer a dedicated NRI Car Loan scheme, but the NRI applicant is typically treated as guarantor rather than owner: a close resident-Indian relative (parent, spouse, sibling, or child) must act as co-applicant, and the vehicle is registered in that relative's name. EMIs are repaid from the NRI's NRE, NRO, or FCNR account, or by remittance from abroad, and SBI's version caps the EMI at 50-65% of net monthly income depending on the loan size. Rates for NRI applicants are generally identical to resident rates at the same bank — the extra requirement is the co-applicant relationship and a steady, documented overseas income of at least USD 1,000/month.
It depends on your CIBIL score. SBI's published 2026 table shows 8.70% for a score of 750+, rising to 8.90% for 721-756, and 9.65-9.85% for 650-720. PSU banks like Canara Bank and Union Bank of India advertise starting rates as low as 7.40-7.45% for their best-qualified borrowers.
Ex-showroom price is the base cost including GST but excludes registration, road tax, and insurance. On-road price adds all mandatory costs and is what you actually pay and finance — it varies by state since road tax does.
Pay 20% of the on-road price as down payment, keep the EMI at or under 10% of your net take-home salary, and limit the tenure to 4 years. It's stricter than what banks will actually approve under their own FOIR rules (up to 50-75% of income).
Always confirm reducing-balance. A "flat rate" of 8%, still sometimes pitched by used-car dealers, works out to roughly 14-15% once converted to reducing balance — nearly double what it sounds like.
Most banks require 10-20% of the on-road price for new cars; some offer 100% financing to salaried applicants with strong CIBIL scores. Used cars typically need 15-30% down.
Yes. Most major banks, including SBI, offer a dedicated NRI Car Loan scheme, but the NRI is typically the guarantor while a resident-Indian relative is the co-applicant and vehicle owner. EMIs are repaid from the NRI's NRE, NRO, or FCNR account.
Up to 7 years at most banks for new cars, though 3-5 years is commonly recommended since cars depreciate quickly. Used-car tenures are usually shorter, often capped so the loan ends before the vehicle reaches 8-10 years of total age.
Yes. Processing fees typically run 0.25-2% of the loan amount. Many PSU banks waive prepayment charges after a lock-in period, while some private banks and NBFCs charge them for the full tenure — worth confirming before you sign.
Reviewed by Evelyn John, Auto Sales Expert. Rates and terms checked against SBI's published 2026 rate table and current published PSU/private bank and NBFC rate sheets.