Car loan rates start at 7.6% this September as banks roll out festive deals

Lenders are waiving processing fees and concessions to woo customers

The festival season is a good time to buy a new car as banks offer competitive interest rates to woo customers, and the recent GST cut on small cars of sub 4 meter category and under 1200 cc to 18 per cent, compared to their earlier 22 per cent levels makes the deal even sweeter. New rates are as low as 7.60 per cent per annum, according to data provided by Paisabazaar.com for terms as of September 10.

 

Latest car loan rates in September

Public-sector banks have the most affordable rates. UCO Bank leads at 7.60 per cent and it is followed by Canara Bank and Bank of Maharashtra at 7.70 per cent.

 

Private banks typically charge higher rates. ICICI Bank’s car loans start at 9.10 per cent, while HDFC Bank begins at 9.20 per cent.

Processing fee waived off

Many lenders are rolling out limited-period festive offers:

 

• Canara Bank is waiving its processing fee completely till 30 September 2025 under its Retail Loan Festival.' 
• IDBI Bank has also announced a zero processing fee till the same date. 
• Punjab & Sind Bank is offering up to 50 per cent concession on fees under its Apna Vahan Sugam scheme. 
• Processing charges otherwise range from as low as Rs 750 (State Bank of India) to up to 2 per cent of the loan amount for ICICI Bank.

Full List of Latest car loan rates in September 

 

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	8.15-11.60	10,174 - 11,021	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	8.85-9.90	10,343 - 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 10th September 2025. Source: Paisabazaar.com  

What borrowers should consider

 

Before signing up for a car loan, compare interest rates and these terms:

 

• Processing fees and seasonal concessions that reduce upfront costs. 
• Keep EMIs manageable without paying too much interest over time. 
• Some lenders like Bank of Maharashtra offer 0.25 per cent interest concessions for existing customers.