Car loans at 7.6% this festival season: Banks roll out zero-fee offers

Several public sector lenders extend zero or concessional processing fees till December 2025 to attract car buyers this festive season

With the festival season in full swing, banks are offering competitive car loan schemes to woo customers. According to data compiled by Paisabazaar.com, annual interest rates for new car loans range from 7.60 per cent to 14.25 per cent, depending on the lender and borrower profile. For a Rs 5 lakh loan over five years, the EMI ranges from Rs 10,043 to Rs 11,699.

 

Latest Public sector banks' car loan rate

 

Public sector banks dominate the segment, with attractive offers and limited-time processing fee waivers.

 

• UCO Bank offers rates starting at 7.60 per cent with zero processing fees till October 31. 
• Canara Bank has waived 100 per cent of processing charges till December 31. 
• Central Bank of India offers no processing fees till March 31, 2026.

 

Union Bank of India has a festive offer with no processing fees, while Punjab National Bank and Bank of Maharashtra have capped fees at 0.25 per cent or less under special festive schemes.

 

Private sector banks such as HDFC Bank and ICICI Bank charge slightly higher rates starting at 9.20 per cent and 8.50 per cent, respectively but their loan processes and digital services are reputed to be quicker.

 

Lowest and highest EMI brackets

 

Borrowers can expect the lowest EMI at around Rs 10,043 per month (UCO Bank at 7.60 per cent), while the highest EMI goes up to Rs 11,699 (Punjab & Sind Bank at 14.25 per cent). The spread highlights how festival-season rate cuts and fee waivers can make a meaningful difference in overall loan cost.

 

Car loan rates in October

 

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	100% waiver till 31.12.2025
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	NIL on all car & electric vehicle loans till 31.10.2025
State Bank of India	8.75	10,319	NIL
IDBI Bank	8.30-9.15	10,210 - 10,416	NIL till 31.10.2025
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)  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 15th October 2025.
Source: Paisabazaar.com

Key takeaways for car buyers

Experts advise comparing multiple factors before finalising a loan:

 

• Interest rate vs. tenure: A slightly lower rate over a long tenure can save thousands in interest. 
• Processing fee impact: Even small festive waivers can reduce the total borrowing cost. 
• Repayment flexibility: Look for prepayment-friendly options to reduce long-term debt.

Festive offers sweeten the deal

With several banks extending their offers till late 2025 and even March 2026, borrowers planning a car purchase this festive season stand to benefit. Whether opting for a budget car or a premium model, this is one of the most borrower-friendly seasons in recent years, combining low rates, tax concessions, and festive fee waivers.