Car loan rates in Dec start at 7.45%: Check best offer of lenders

State-owned lenders are lead year-end financing deals by slashing interest costs to attract customers

 

Car loan interest rates in December remain competitive, with public-sector banks offering some of the lowest starting rates. Private banks and non-bank lenders price loans higher but offer faster approvals and flexible features, according to data compiled by Paisabazaar.com.

 

Public-sector banks

 

Several government-owned banks are offering car loans below 7.60 per cent per annum, making them the most affordable option for cost-conscious borrowers with strong credit profiles.

 

Canara Bank and Bank of Maharashtra are offering starting rates of 7.45 per cent, translating into an EMI of about Rs 10,007 on a Rs 5 lakh loan for five years. Punjab National Bank follows closely with rates beginning at 7.55 per cent, while Union Bank of India and Bank of India are offering loans from around 7.60 per cent.

 

Some banks are also using fee waivers as a year-end incentive. Canara Bank is offering a 100 per cent waiver on processing fees till December 31, 2025, while Central Bank of India has announced zero processing fees till March 31, 2026, according to Paisabazaar.

 

Processing fees can change the overall cost

 

While interest rates draw the most attention, processing fees can significantly affect the total borrowing cost. Public-sector banks generally charge lower fees, often capped between Rs 1,000 and Rs 2,500. UCO Bank, for instance, does not charge processing fees on car loans, including electric vehicles.

 

In contrast, private banks and NBFCs tend to charge higher fees. ICICI Bank is levying processing charges of up to 2 per cent of the loan amount, while HDFC Bank’s fees go up to 0.5 per cent, according to Paisabazaar.com.

 

Private banks

 

Private banks are offering car loans at higher starting rates but often compensate with quicker approvals and digital processes. HDFC Bank’s car loan rates start at 8.20 per cent, while ICICI Bank’s begin at 8.50 per cent. IDFC First Bank is pricing car loans from 9.99 per cent, with EMIs starting above Rs 10,600 for a Rs 5 lakh loan.

 

What borrowers should keep in mind

 

Before finalising a car loan, borrowers should look beyond the headline rate. Key factors to compare include:

 

• Interest rate range applicable to their credit score
• Processing fees and ongoing offers or waivers
• EMI affordability over the chosen tenure

 

Additional concessions for existing customers

 

Rates and charges are as of December 17 and are subject to change, according to Paisabazaar.com. Borrowers are advised to compare multiple lenders and negotiate where possible to secure the most suitable deal.