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On-road vs ex-showroom price: how much car loan do you actually need?
The price on the brochure is the ex-showroom price — but that is not what you pay, nor what your loan is based on. Lenders work off the on-road price and fund only 80–90% of it. Get this right before you visit the showroom so the EMI and down payment hold no surprises.
Ex-showroom vs on-road: what is the difference?
The ex-showroom price is the manufacturer's price plus GST — the cost of the car itself, before it can legally hit the road. The on-road price adds everything you must pay to register and drive it:
- Road tax — charged on the ex-showroom value, roughly 3–20% depending on your state.
- RTO registration charges — number plate, registration and handling.
- Mandatory insurance — at least the first year's motor insurance.
- TCS — tax collected at source on cars above ₹10 lakh ex-showroom.
- Optional extras — extended warranty, accessories, fastag, etc.
The on-road price is typically 10–15% higher than ex-showroom — sometimes more in high-tax states.
How much will the lender actually finance?
Most banks and NBFCs fund 80–90% of the on-road price (some offer up to 100% to strong-profile borrowers), with internal caps linked to the ex-showroom value. You cover the rest as a down payment.
Worked example: a ₹10 lakh on-road car
Say the on-road price is ₹10,00,000 and the lender funds 85%:
- Loan amount: ₹8,50,000
- Down payment: ₹1,50,000
At a 9.5% reducing rate over 7 years, the EMI on the ₹8.5 lakh loan is about ₹13,892, with roughly ₹3,16,960 paid as interest over the full term. Choose a shorter 5-year tenure and the EMI rises but the total interest drops sharply — worth doing for a depreciating asset.
Plan your real EMI. Enter your financed amount (on-road price minus your down payment), the rate and the tenure to see the EMI and total interest.
Open the Car Loan EMI Calculator →Why a bigger down payment is usually smart
- Lower EMI and less interest — you borrow less, so you pay less overall.
- You avoid being "underwater" — a car loses value fast; a larger down payment keeps your loan below the car's resale value.
- Easier approval — a higher down payment lowers the lender's risk.
Many buyers aim for a 20% down payment as a sensible default. Watch the rate too: dealership finance is often costlier than your own bank, and if a rate is quoted "flat" rather than reducing, convert it first — see our guide on flat vs reducing balance rates.
Frequently asked questions
Is a car loan on the ex-showroom or on-road price?
Lenders assess the loan against the on-road price but typically fund 80–90% of it, with internal caps linked to the ex-showroom value. You pay the remaining 10–20% as a down payment. On a ₹10 lakh on-road car at 85% funding you would borrow about ₹8.5 lakh and pay ₹1.5 lakh upfront.
What is included in the on-road price?
On-road price = ex-showroom price + road tax (about 3–20% of ex-showroom, varying by state) + RTO registration charges + mandatory first-year insurance + any TCS on cars above ₹10 lakh ex-showroom, plus optional extras like extended warranty or accessories. It is the total amount you actually pay to drive the car away.
What down payment should I plan for a car loan?
Plan for at least 10–20% of the on-road price, since lenders rarely fund 100%. A larger down payment lowers both your EMI and the total interest, and reduces the risk of owing more than the car is worth as it depreciates. Many buyers aim for a 20% down payment.
EasyEMI is an estimator for information only and is not financial advice. Funding percentages, taxes and figures are illustrative as of June 2026 and vary by lender and state. Confirm with your bank or dealer. See our About page for methodology.