Car loan rates in mid-Jan 2026 start at 7.35%, EMIs from Rs 9,983
Lenders kick off 2026 with competitive car finance offers, as public sector banks lead the market with rates as low as 7.35%
 "Car loan rates in mid-Jan 2026 start at 7.35%, EMIs from Rs 9,983")
Annual car loan interest rates in January range from 7.35 per cent to above 14 per cent, according to data from Paisabazaar.com on banks and non-banking financial companies.
Public sector banks (PSBs) provide competitive rates, particularly for existing customers:
- UCO Bank offers rates starting at 7.35 per cent, while Union Bank of India ranges between 7.40-9.45 per cent.
- Punjab and Sind Bank extends loans at 7.50-14 per cent, with concessions available under the “Apna Vahan Sugam” scheme.
- State Bank of India provides a straightforward option with a fixed rate of 8.7 per cent.
- Privately owned ICICI Bank and HDFC Bank start their rates at 8.50 per cent and 8.20 per cent, respectively, while IDFC FIRST Bank begins at 9.99 per cent.
EMI snapshot
For a loan of Rs 5 lakh over five years, equated monthly instalments (EMIs) range from Rs 9,983 to Rs 11,634, depending on the lender and rate:
- UCO Bank: Rs 9,983 – Rs 10,624
- Punjab and Sind Bank: Rs 10,019 – Rs 11,634
- HDFC Bank: Rs 10,186 onwards
- Federal Bank: Rs 10,624 onwards
Even small differences in rates can change EMIs by several hundred rupees per month, highlighting the importance of comparison.
Processing fees and concessions
Processing fees vary significantly, from no fees at Central Bank of India (until 31 March 2026) to up to 2 per cent of the loan amount at ICICI Bank. PSBs often provide nominal fees or concessions for existing customers:
Bank of Maharashtra: NIL
Punjab National Bank: Up to 0.25 per cent
Karnataka Bank: Up to 0.6 per cent
Borrowers should consider both interest rates and processing fees to determine the total loan cost.
| Name of Banks/NBFCs | Interest rate (%) p.a. | EMI (Rs) Loan amount-5 lakh Tenure-5 years | Processing fee (% of loan amount) |
| Union Bank of India | 7.40-9.45 | 9,995 - 10,489 | Up to Rs 1,000 |
| Punjab National Bank | 7.55-9.45 | 10,031 - 10,489 | Up to 0.25% (Rs. 1,000 - Rs. 1,500) |
| Bank of Baroda | 7.90 - 11.35 | 10,114 - 10,959 | Up to Rs. 2,000 |
| Canara Bank | 7.45-11.45 | 10,007 - 10,984 | 0.25% ( Rs 1,000 - Rs 5,000) |
| Bank of India | 7.60-12.55 | 10,043 - 11,262 | Up to 0.25% (Rs. 2,500 - Rs. 10,000) |
| UCO Bank | 7.35-10.00 | 9,983 - 10,624 | 0.5% (Max. Rs 5,000) |
| State Bank of India | 8.7 | 10,307 | Rs 750 - Rs 1,500 |
| IDBI Bank | 7.75-9.40 | 10,078 - 10,477 | Rs 2,500 |
| Bank of Maharashtra* | 7.45-11.75 | 10,007 - 11,059 | NIL |
| Indian Overseas Bank | 7.55-12.00 | 10,031 - 11,122 | 0.50% (Rs 500 - Rs 5,000) |
| ICICI Bank | 8.50 onwards | 10,258 onwards | Up to 2% |
| HDFC Bank | 8.20 onwards | 10,186 onwards | Up to 0.5% (Rs. 3,500 - Rs. 8,000) |
| Karnataka Bank | 8.00-11.50 | 10,138 - 10,996 | 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** | 7.50-14.00 | 10,019 - 11,634 | 0.25% (Rs. 1,000 - Rs. 15,000) |
| Indian Bank | 7.50-9.55 | 10,019 - 10,513 | Rs. 1,000 |
| IDFC FIRST Bank | 9.99 onwards | 10,621 onwards | Up to Rs. 10,000 |
| Central Bank of India | 7.60-9.20 | 10,043 - 10,428 | 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 14th Jan 2026 | |||
| Source: Paisabazaar.com | |||