Car Loan: A car loan is a financial agreement that allows you to borrow money to purchase a vehicle, which you repay over time with interest.
In India, car loans come with low interest rates and can be repaid over up to 8 years. Some lenders may offer loans covering up to 100% of the car’s on-road price. by LoansBazaar India.
LoansBazaar India — Car Loan Interest Rates 2026
Car Loan Interest Rates: Quick Summary
Car loan interest rates start from 7.45% p.a. onwards for eligible borrowers, based on the lender and applicant profile. LoansBazaar India customers ko 100+ Banks & NBFCs ke available car-loan options check karne mein assistance provide karta hai.
- Lowest listed rate: 7.45% p.a. onwards
- Canara Bank: 7.45% p.a. onwards
- Union Bank of India: 7.50% p.a. onwards
- Indian Overseas Bank: 7.55% p.a. onwards
- PNB: 7.60% floating / 8.60% fixed onwards
- Bank of Baroda: 7.60% floating / 8.50% fixed onwards
- SBI: 8.80% p.a. onwards in the verified comparison data
- Maximum tenure: lender policy ke according, generally up to 7–8 years
- Loan amount: applicant eligibility, vehicle value aur lender policy ke according
- Credit score: higher credit score generally better pricing/eligibility mein helpful ho sakta hai
Car Loan Interest Rate Comparison – 2026
| Bank / Lender | Interest Rate p.a. | Approx. EMI for ₹1 Lakh / 7 Years |
|---|---|---|
| Canara Bank | 7.45% onwards | ₹1,531 onwards |
| Union Bank of India | 7.50% onwards | ₹1,534 onwards |
| Indian Overseas Bank | 7.55% onwards | ₹1,536 onwards |
| Punjab National Bank (PNB) | Floating: 7.60% onwards / Fixed: 8.60% onwards | ₹1,539 / ₹1,589 |
| Bank of Baroda | Floating: 7.60% onwards / Fixed: 8.50% onwards | ₹1,539 / ₹1,584 |
| Bank of India | 7.60% onwards | ₹1,539 onwards |
| IDBI Bank | Floating: 7.75% onwards / Fixed: 8.65% onwards | ₹1,546 / ₹1,591 |
| Karnataka Bank | 8.01% onwards | ₹1,559 onwards |
| HDFC Bank | 8.15% onwards | ₹1,569 onwards |
| ICICI Bank | 8.35% onwards | ₹1,576 onwards |
| State Bank of India (SBI) | 8.80% onwards | ₹1,599 onwards |
| Axis Bank | 8.95% onwards | ₹1,606 onwards |
| Kotak Mahindra Bank | 9.00% onwards | ₹1,609 onwards |
| Federal Bank | 7.60% onwards | ₹1,539 onwards* |
| Jammu & Kashmir Bank | RLLR + 0.75% onwards (Floating) / RLLR + 0.25% onwards (Fixed) | Contact lender |
| South Indian Bank | Contact lender | Contact lender |
| YES BANK | Contact lender | Contact lender |
Note:EMI is indicative and calculated for ₹1 lakh over 84 months. Actual EMI will depend on the final sanctioned rate, amount and tenure.
Types of Car Loan Interest Rates
Car-loan pricing can be offered under different rate structures depending on the lender and product.
1. Fixed Interest Rate
A fixed-rate car loan generally keeps the applicable interest rate unchanged according to the agreed loan terms.
Benefits:
- Predictable EMI
- Easier monthly budgeting
- Protection from upward rate movements during the applicable fixed period
2. Floating Interest Rate
A floating-rate loan can change according to the applicable benchmark/lender’s pricing mechanism and loan terms.
Benefits:
- Potential benefit if applicable rates decline
- May initially be priced competitively
Important: Fixed/floating availability and rate-reset mechanism lender ke specific product par depend karte hain.
Types of Car Loans
The different types of car loans are mentioned below:
- New Car Loan: New car loans can be used to purchase a brand-new car straight out of the showroom. Depending on the bank, the interest rates will vary. Up to 100% of the on-road price of the car may be provided as a loan.
- Used Car Loan: Lenders offer used car loan up to 80-85% of the price of the car at attractive interest rates for a loan tenure up to 5 years. However, certain lenders will offer loans for cars that have been purchased within the last 5 years.
- Loan against Car: When one is in dire need of funds, he or she can pledge his or her old car as collateral in order to obtain sufficient funds to purchase a new car. This is known as Loan against Car. If you have a bad credit score, you can pledge your old car to the bank as collateral to obtain some much-needed funds.
- Green Car Loan (Electric/Hybrid Vehicle Loan): Some banks, including SBI, offer dedicated loan schemes for electric and hybrid vehicles, sometimes with a lower interest rate and longer repayment tenure than a standard new car loan.
- Car Loan Balance Transfer: Allows you to move your existing car loan to a new lender offering a lower interest rate, reducing your EMI or total interest outgo.
- Top-Up Loan on Car Loan: Some lenders allow you to borrow an additional amount over and above your existing car loan for other personal expenses, using the same car as security.
Key Components of a Car Loan
The main components of a car loan are as follows:
- Monthly Instalments: The EMI that must be paid every month. EMI consists of interest and principal amount.
- Down Payment: The upfront amount paid when you purchase the car.
- Loan Term: The tenure or duration of the loan. EMIs must be paid for the selected tenure.
- Rate of Interest: The interest rate charged by the lender on the Vehicle loan that has been availed.
- Principal Amount: The amount that is borrowed to buy the car. The principal amount does not include any fees or interest levied by the bank.
How to Apply for a Car Loan
Online
Most lenders provide the option to apply for a car loan online and the process is mentioned below:
- You will need to visit the official website of the lender to apply for a loan.
- Select ‘Apply Now’ under the car loan section.
- Enter the relevant details.
- The documents can be uploaded.
- A customer service representative will call you to process the request.
You can visit the bank branch and apply for a car loan. The relevant documents must be submitted. Once the verification process is completed, the loan will be provided.
Offline
- You can visit the bank branch and apply for a car loan.
- The relevant documents must be submitted.
- Once the verification process is completed, the loan will be provided.
Eligibility Criteria to Avail a Car Loan
The Car Loan Eligibility Criteria can be different for different banks. The common criteria are as follows:
- The Age of the individual must be between 18 years and 75 years.
- Minimum net monthly income of Rs. 15,000.
- At least one year of employment with the current employer.
- Must be salaried or self-employed, working for a government establishment or a private company.
Documents Required for Car Loan
Salaried Applicant
- PAN Card
- Aadhaar/valid KYC
- Address proof
- Salary slips
- Bank statements
- Employment proof, if required
- Photograph, where applicable
Self-Employed Applicant
- PAN Card
- Aadhaar/valid KYC
- Address proof
- Bank statements
- ITR
- Business proof
- Financial statements, where required
- Other lender-specific documents
Car Loan EMI Calculator
In case you wish to avail a car loan to purchase a four-wheeler, you can use LoansBazaar India car loan emi calculator check the monthly payments. The calculator is easy to use and only basic details such as the loan amount, processing fee, tenure, and interest rate must be entered.
Some of the main advantages of using LoansBazaar India car loan emi calculator are mentioned below:
- A complete break-up of the amount that needs to be paid will be provided.
- Your budget can be planned as you will know the EMIs.
- Accurate results are provided.
- Helps in saving time as results are displayed immediately.
How to Calculate Car Loan EMI?
The Equated Monthly Installments (EMIs) that you will pay will depend on a few key factors.
The EMI for any type of loan is essentially calculated using a formula. The formula is as follows:
Formula to Calculate Car Loan EMI
E = P x R x (1+R)^n / {(1+R)^n – 1}
where ‘E’ stands for the EMI you owe,
‘P’ stands for the principal amount,
‘R’ stands for the interest rate applicable to your car loan,
and ‘n’ stands for the tenure of the car loan (in months).
- The loan amount.
- The interest rate that is applicable to the loan.
- The tenure of the loan.
- The processing fees.
The higher the loan amount, the higher your EMI will be. Similarly, the shorter the loan tenure the higher the EMI. To find the best compromise between an affordable EMI and duration you should check out our
Features & Benefits of Car Loans
When it comes to car loans in India, in general, the following features and benefits are offered. Note that the following is a generalised look at the advantages offered by car loans. Individually, lenders may have highly customized and specialized offers for their customer base.
- Car loans in India help you purchase a car even if you don’t have the full amount upfront.
- Most lenders finance the entire on-road price, often with no down payment required.
- Some banks offer loans in crores, giving you wide freedom to choose your car.
- Car loans are usually secured loans, with the car serving as collateral.
- Procuring a car loan is simpler compared to other loans, and even those with lower credit scores may qualify (varies by lender).
- Many loans offer fixed interest rates, ensuring predictable monthly payments.
- Interest rates are often based on your credit score – higher scores can get you cheaper loans.
- Car loans are available for both new and used cars.
Factors that Affect Car Loan Interest Rate
The main factors that affect car loan interest rates are mentioned below:
- Credit Score: The single biggest factor. A score of 750+ typically qualifies you for the lowest advertised rates; a score below 700 usually means a higher rate or a stricter review.
- Income and Job Stability: Higher, steady income and longer tenure with your current employer reassure lenders of your repayment ability.
- Loan Tenure: Shorter tenures often carry marginally lower rates but higher EMIs.
- Down Payment: A higher down payment lowers the lender’s risk and can help you negotiate a better rate.
- New vs. Used Car: New car loans attract lower rates than used car loans.
- Relationship with the Lender: Holding a salary account, savings account or fixed deposits with the bank can sometimes secure a preferential rate.
- Women Applicants: Several banks offer a rate concession for women borrowers.
- RBI Policy and Market Conditions: Changes to the RBI repo rate influence floating rates across the market.
Advantages and Disadvantages of Car Loans
The main advantages and disadvantages of car loans are mentioned in the table below:
Advantages | Disadvantages |
|
|
Common Mistakes to Avoid When Availing a Car Loan
Some of the common mistakes that must be avoided when availing a car loan are mentioned below:
- Not comparing car loans from different lenders.
- Choosing the longest possible tenure just to lower the EMI, without checking the total interest cost.
- Ignoring processing fees, insurance costs and other charges when comparing loans.
- Not checking your credit score before applying, which can lead to rejection or a higher rate.
- Overlooking whether the loan is fixed or floating, and what that means for prepayment charges.
- Skipping the fine print on foreclosure terms, especially for fixed-rate loans.
Car Loan FAQs
What amount can I expect in terms of the car loan?
Ans. The funding amount differs from one bank to the other, and depends on various conditions including the characteristics of your car and loan requirements. However, the minimum loan amount will be equal to Rs.1, 00,000 in most cases.
Can I get a loan for the entire cost of my car?
Ans. In most cases, banks provide only 80% to 90% of the total cost of the vehicle in the form of a car loan. However there are a few banks that may cover the entire cost of the car. Make sure go compare the available offers carefully before selecting your loan option.
What are the conditions involved if I wish to pre-pay the entire loan amount?
Ans. Banks offer an option of prepaying the entire car loan amount and save on vital interest payments in the future. However, most banks allow pre-payment only after the completion 6 months of the loan tenure. Also, a small fee in the form of pre-payment penalty will be chargeable by the bank.
Can I negotiate on the loan interest rate?
Ans. In most cases, you are able to negotiate the loan interest rate amount based on your credit score, credit history and previous relationship with the lender.
What car loan repayment tenures are commonly available?
Ans. Commonly, all banks offer repayment tenures ranging from 12 months or a year to 84 months or 7 years depending upon the loan amount and customer’s repayment capabilities.
Is a guarantor mandatory for a new car loan?
Ans. No, generally a guarantor is required only if you are unable to meet one or more of the eligibility criteria specified by the lender.
Do I need a guarantor while applying for a car loan?
Ans. Most banks do not ask for a guarantor in case of both new and used car loans but if your income doesn’t meet the set eligibility criteria, the bank may require you to involve your parent or spouse as a co-applicant.
Which cars are financed by the car loan institutions in India?
Ans. All small to medium sized cars, Sports Utility Vehicles (SUV) and Multi Utility Vehicles (MUV) come under the car loans finances available in India. However, there may be exceptions, enquire about the same at the time of car loan application or refer to the loan brochure.
Can I borrow an additional loan over my allotted second-hand car loan?
Ans. A number of banks offer refinancing option or borrowing an additional loan over an allotted second-hand car loan. The value of the car can be redeemed into cash to meet your immediate monetary requirements. Ideally, 80%- 85% of the car’s valuation amount cab be availed.
Disclaimer: LoansBazaar India is a digital loan assistance platform and does not guarantee loan approval. Interest rates, loan amount, EMI, tenure, fees and other terms are subject to the respective bank/NBFC’s eligibility criteria, policies and final approval. EMI calculations are indicative only. Please verify final terms directly with the lender.
LoansBazaar India does not guarantee approval, disbursement, lowest interest rate, or any specific loan terms.