Car loan rates decline in Sept: Know more about 5 cheapest offers

Several lenders are waiving processing fees to woo customers in festival season

 

People planning to take loans to buy cars in the festival season have plenty of options, as banks are offering competitive interest rates and even waiving processing fees. Annual interest rates in September are as low as 7.60 per cent, according to data from Paisabazaar.com.

 

Latest car loan rates in September 

 

Lowest rates: UCO Bank (7.60 per cent), Canara Bank (7.70 per cent) and Bank of Maharashtra (7.70 per cent) are among the lenders offering the lowest starting interest rates.

 

No processing: Canara Bank will waive off processing fees under its Retail Loan Festival until September 30. IDBI Bank, too, has waived its usual processing fee until the end of the month.

 

 

Rate range: Punjab & Sind Bank and Bank of India have wider rate bands, going up to 14.25 per cent and 12.15 per cent, respectively, which means borrowers should check eligibility to secure the lower end of the rate range.

 

EMI impact

 

For a Rs 5 lakh loan to be repaid over five years, equated monthly instalments (EMI) range from about Rs 10,043 to Rs 11,699, depending on the bank and applicable interest rate. Lower rates can reduce the EMI by over Rs 1,500 a month compared to higher-rate loans — a significant saving over the tenure.

 

Processing fees 

 

Processing fees vary from as low as Rs 750 (State Bank of India) to as high as 2 per cent of the loan amount (ICICI Bank). Borrowers should factor in this one-time cost while comparing options, as it can meaningfully affect the overall cost of borrowing.

 

What borrowers should do

 

Experts recommend comparing not just interest rates but also processing fees, prepayment charges and eligibility criteria before finalising a lender. With several banks offering festival-linked concessions until the end of September, acting before the deadline may help secure a better deal.

  Car loan rate 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	8.80-9.90	10,331 - 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 17th September 2025. Source: Paisabazaar.com