Car loan rates start at 7.6%: Check latest bank deals, estimated repayments

Car loan rates range 7.6% to 14.25% in August, with lowest EMIs near Rs 10,000 and some banks offering zero processing fees

Most Indians take loans to buy cars and even a small difference in rates can change their monthly repayments. According to the latest data from Paisabazaar.com, several public sector banks are offering car loans at rates below 8 per cent to make repayments more affordable.

 

Best car loan rates right now

UCO Bank offers the most competitive starting rate at 7.60 per cent, translating into the lowest equated monthly instalment (EMI) of Rs 10,043. Canara Bank, Bank of Maharashtra, and Punjab & Sind Bank have rates in the 7.80–7.85 per cent bracket, keeping monthly repayments just above Rs 10,067 for a Rs 5 lakh loan.

 

At these levels, car loans are cheaper than many personal loans.

 

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
Punjab National Bank	7.85-9.70	10,102 - 10,550	Up to 0.25% (Rs. 1,000 - Rs. 1,500)
Bank of Baroda	8.15-11.70	10,174 - 11,047	Up to Rs. 2,000
Canara Bank	7.70-11.70	10,067 - 11,047	0.25% (Rs 1,000 - Rs. 5,000)  (100% waiver on processing fee under Retail Loan Festival from 01.07.2025 to 30.09.2025)
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	8.90-9.90	10,355 - 10,599	Rs 750 - Rs 1,500
IDBI Bank	8.30-9.15	10,210 - 10,416	Rs 2,500  (Zero processing fee till 30.09.2025)
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)
Indian Overseas Bank	7.80-12.00	10,090 - 11,122	0.50% (Rs 500 - Rs 5,000)
ICICI Bank	9.10 onwards	10,403 onwards	Up to 2%
HDFC Bank	9.20 onwards	10,428 onwards	Up to 1% (Rs. 3,500 - Rs. 9,000)
Karnataka Bank	8.95-11.64	10,367 - 11,031	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)
*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 20th August 2025.
Source: Paisabazaar.com

 

EMI snapshot

For a Rs 5-lakh loan with a tenure of five years, here’s how the math works out: 

• At 7.60 per cent, EMI is about Rs 10,043 per month 
• At 7.70 per cent, EMI rises slightly to Rs 10,067 per month 
• At 7.80 per cent, EMI is around Rs 10,090 per month

 

Loans priced closer to 12 per cent push EMI beyond Rs 11,000. A gap of nearly Rs 1,000 per month can make a material difference in affordability.  Calculate EMI: EMI Calculator Tool

 

Processing fee waivers add to savings

While interest rates matter most, borrowers should also check the processing fee. Canara Bank is offering a 100 per cent waiver until 30 September 2025 under its retail loan festival, while IDBI Bank has announced zero processing fee until the same date.

 

Such waivers can save borrowers anywhere between Rs 2,000 and Rs 5,000 upfront. In some cases, processing charges go as high as Rs 15,000, depending on the bank and loan size.

 

Bottom line

With public sector banks leading the charge, car buyers this festive season can secure attractive loans at sub-8 per cent rates. Choosing the right lender not only lowers monthly EMIs but also reduces upfront costs. Borrowers are advised to compare both interest rates and processing fees before signing up.