Car loan rates at 7.60-14%: Know best rates offered for Diwali season
Some lenders have waived processing fees to win customers amid rising demand for new vehicles
 "Car loan rates at 7.60-14%: Know best rates offered for Diwali season")
With Diwali around the corner, people planning to buy cars are in a sweet spot. Tax cuts and record automobile sales have spurred demand, prompting banks to roll out car loans at competitive interest rates.
Car loan rates in October
According to data from Paisabazaar.com, car loan interest rates range from 7.60 per cent to over 14 per cent per annum. For a loan of Rs 5 lakh to be repaid in five years, monthly EMIs vary from Rs 10,043 to Rs 11,699, depending on lender and borrower profiles.
| NEW CAR LOAN-RATES AND CHARGES | |||
| Name of Lender | Interest rate (%) p.a. | EMI (Rs) Loan amount-5 lakh Tenure-5 years | Processing fee (% of loan amount) |
| Union Bank of India | 7.80-9.70 | 10,090 - 10,550 | Up to Rs 1,000 (No processing fee under festive offer) |
| Punjab National Bank | 7.85-9.70 | 10,102 - 10,550 | Up to 0.25% (Rs. 1,000 - Rs. 1,500) |
| Bank of Baroda | 8.15-11.60 | 10,174 - 11,021 | Up to Rs. 2,000 |
| Canara Bank | 7.70-11.70 | 10,067 - 11,047 | Up to 0.25% (Rs 1,000 - Rs. 5,000) |
| Bank of India | 7.85-12.15 | 10,102 - 11,160 | Up to 0.25% (Rs. 2,500 - Rs. 10,000) |
| UCO Bank | 7.60-10.25 | 10,043 - 10,685 | 0.50% (Rs 5,000) |
| State Bank of India | 8.80-9.90 | 10,331 - 10,599 | NIL |
| IDBI Bank | 8.30-9.15 | 10,210 - 10,416 | Up to Rs 2,500 |
| Bank of Maharashtra* | 7.70-12.00 | 10,067 - 11,122 | Up to 0.25% of the loan amount (max. up to Rs. 15,000) No processing fee under festive offer) |
| Indian Overseas Bank | 7.80-12.00 | 10,090 - 11,122 | 0.50% (Rs 500 - Rs 5,000) |
| ICICI Bank | 8.50 onwards | 10,258 onwards | Up to 2% |
| HDFC Bank | 9.20 onwards | 10,428 onwards | Up to 1% (Rs. 3,500 - Rs. 9,000) |
| Karnataka Bank | 8.97-11.66 | 10,372 - 11,037 | Up to 0.60% (Rs. 2,500 - Rs. 11,000) |
| Federal Bank | 10.00 onwards | 10,624 onwards | Rs. 2,000 - Rs. 4,500 |
| Punjab and Sind Bank** | 7.75-14.25 | 10,078 - 11,699 | 0.25% (Rs. 1,000 - Rs. 15,000) |
| Indian Bank | 7.75-9.85 | 10,078 - 10,587 | Rs. 1,000 |
| IDFC FIRST Bank | 9.99 onwards | 10,621 onwards | Up to Rs. 10,000 |
| Central Bank of India | 7.85-9.45 | 10,102 - 10,489 | 0.50% of loan amount (Rs. 2,000 - Rs. 20,000) (No processing fees till 31.03.2026) |
| *0.25% interest rate concession for existing home loan borrowers and other existing customers having atleast 6 months of relationship with the bank. **Concession of up to 50% on processing fee for PSB Apna Vahan Sugam. | |||
| Rates and charges as of 8th October 2025. | |||
| Source: Paisabazaar.com | |||
Tax cut, record sales
The government’s decision to reduce Goods and Services Tax on cars has effectively lowered on-road prices for many models, enhancing affordability. Auto companies such as Maruti Suzuki and Hyundai have reported strong growth in bookings, signalling robust consumer sentiment.
This combination of lower taxes and festive demand has encouraged lenders to introduce offers for the festival season. Such offers include:
- Union Bank of India and Bank of Maharashtra waive processing fees under their festival schemes.
- Central Bank of India will not charge processing fees till March 2026.
- Punjab and Sind Bank provide a 50 per cent concession on processing fees for select schemes.
These concessions could significantly reduce the overall cost of borrowing.
How to choose the right loan
Experts recommend looking beyond headline interest rates. Borrowers should consider:
- Processing fees: Even small concessions during festivals matter over the loan tenure.
- EMI affordability: Ensure monthly outflows are sustainable.
- Prepayment options: Check for any penalties.
- Total cost of the loan: Account for both interest and fees over the full term.