Car loan rates start at 7.6%: Here's where interest, EMI & fees stand now

A quick look at how major banks are offering in terms of repayment terms, processing fees and tenure

Banks are revising their car loan interest rates and fees, offering attractive options to borrowers ahead of the festive season. Annual interest rates on new cars range from 7.60 per cent to 14.25 per cent, depending on the lender and borrower profile, according to data from Paisabazaar.com.

 

Here’s a look at how major banks stack up in terms of interest rates, EMIs, and processing fees for a loan of Rs 5 lakh over five years.

 

Lowest interest rates on offer

Public-sector banks have lower rates.

 

-UCO Bank leads the pack with rates from 7.60 per cent to 10.25 per cent, translating to EMIs between Rs 10,043 and Rs 10,685.

 

 

-Canara Bank (7.70 per cent onwards), Bank of Maharashtra, and Indian Bank also offer competitive starting rates under 8 per cent.

 

-Punjab and Sind Bank, despite a wide range (7.75 per cent to 14.25 per cent), is offering a 50 per cent processing fee waiver under its PSB Apna Vahan Sugam scheme.

 

-Private banks such as HDFC Bank and ICICI Bank start from 9.10 per cent-9.20 per cent, with higher EMIs of around Rs 10,400 and above.

 

Processing fee waivers and offers

 

Many banks are sweetening deals with processing fee discounts:

 

-Canara Bank is offering a 100 per cent waiver on fees under its Retail Loan Festival (valid till 30 September 2025).

 

-Punjab and Sind Bank and Bank of Maharashtra offer concessions for existing customers.

 

-SBI charges a flat fee between Rs 750 and Rs 1,500, among the lowest in the sector.

 

On the higher side, ICICI Bank charges up to 2 per cent, while Federal Bank has fixed fees between Rs 2,000 and Rs 4,500.

 

Compare EMIs and total cost carefully

 

While a low interest rate is important, total cost also depends on processing fees and your relationship with the bank. Here’s a quick EMI snapshot for a Rs 5 lakh loan over five years:

 

-Rs 10,043/month (lowest) – UCO Bank

 

-Rs 10,550/month – Punjab National Bank, Union Bank

 

-Rs 11,699/month (highest) – Punjab and Sind Bank (at 14.25 per cent)

 

Below is a detailed table of offerings, fees and estimated EMI of a 5-year loan of Rs 5 lakh by different banks.

 

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	8.00-12.15	10,138 - 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	8.90-9.95	10,355 - 10,611	Rs 750 - Rs 1,500
IDBI Bank	8.30-9.15	10,210 - 10,416	Rs 2,500
Bank of Maharashtra*	7.70-12.00	10,067 - 11,122	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	9.16-11.64	10,418 - 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. 1000
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 30th July 2025.
Source: Paisabazaar.com

  Borrowers should compare not just interest rates, but also fees, EMIs, and festival offers before choosing a car loan. A seemingly small difference in rate or fee can lead to thousands saved or spent over the tenure.

 

As always, reading the fine print and checking for prepayment charges, eligibility conditions, and special schemes (like customer loyalty discounts) can make a big difference to your overall borrowing cost.