Longer tenures usually come with lower interest ratesIf the interest on your car loan is your only consideration, then choosing a longer repayment tenure will offer you the lowest rates. There's also the added bonus of smaller EMIs (equated monthly instalments). The drawback here is that longer tenures also charge higher interest. If you're looking for interest savings rather than a low interest rate, then choose a shorter tenure. But do so only if you can afford to pay a larger EMI.For example, the EMI for a Rs.5 lakh car loan at an interest of 9.50% p.a. for 5 years is Rs.10,501. The total interest payable is Rs.1,30,056. So essentially, you're repaying Rs.6,35,056. Now if you have the financial capacity to repay more and choose a tenure of 3 years, then your EMI will be Rs.16,061. The total interest payable will be Rs.76,593 and the overall repayment towards the loan will be Rs.5,81,593. The interest savings alone on this loan are Rs.53,463, all for choosing a shorter loan tenure. Note: A 1% processing fee is added to the calculations.If you wish to calculate your EMIs and total interest payable on your car loan, you can use the BankBazaar Car Loan EMI Calculator.