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%

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