What you need to know
Car loan processing fees range from a flat ₹500 + GST (SBI, small loans) to about ₹8,500 + GST (ICICI) or up to 1% at some private banks. Every fee must appear in the Key Facts Statement and is included in the APR.
Fees and prepayment charges by bank
| Lender | Processing fee | Prepayment / foreclosure |
|---|---|---|
| Canara Bank Car Loan | 0.25% of loan (min ₹1,000, max ₹5,000) + GST; 50% waiver from 1 Jul to 30 Sep 2026 | No prepayment penalty |
| Bank of Baroda Car Loan | Up to ₹10 lakh: ₹1,500 + GST; above ₹10 lakh: ₹2,000 + GST; ₹500 + GST for government / PSU employees | Floating: nil. Fixed: free up to ₹40,000 within 2 years, 2% + GST above that within 2 years, nil after 2 years |
| PNB Car Loan | 0.25% of loan (min ₹1,000, max ₹1,500) + GST | Floating: nil. Fixed: 2% of amount prepaid (exceptions when prepaid from own funds) |
| Union Bank of India Car Loan | ₹1,000 + GST (aggregator); often waived for electric vehicles | Nil (floating rate); the bank also states nil when closed from own verifiable sources |
| HDFC Bank Car Loan | Up to 0.5% of loan (min ₹3,500, max ₹8,000) per BankBazaar; ClearTax shows 1% (min ₹3,500, max ₹9,000) — plus GST | Foreclosure 6% of principal outstanding within 12 months, 5% at 13 – 24 months, 3% after 24 months |
| ICICI Bank Car Loan | Up to ₹8,500 + GST | Foreclosure 3% + GST up to 12 months, 2% + GST at 13 – 24 months, nil after 24 months; part-prepayment 3% + GST up to 24 months, nil after |
| SBI Car Loan | Up to ₹5 lakh: ₹500 (salaried) / ₹750 (others); ₹5 – 10 lakh: ₹1,000 / ₹1,250; above ₹10 lakh: ₹1,500 / ₹2,000 — all + GST | No prepayment charge; foreclosure charge waived after 2 years |
| Axis Bank Car Loan | ₹3,500 – ₹5,500 + GST | Foreclosure charge 5% of principal outstanding |
Other charges
| Charge | Typical level |
|---|---|
| Processing fee | Flat ₹500 – ₹8,500 or 0.25% – 1% of loan, + 18% GST |
| Documentation / stamp duty | Stamp duty on the loan agreement as per state law; some banks add a documentation charge |
| Penal charges | Since 1 Jan 2024 RBI allows only “penal charges” on defaults — a fixed fee, not extra interest, and not added to the principal |
| EMI bounce / NACH return | Fixed fee per bounce as per the bank’s schedule |
| Foreclosure / part-prepayment | Nil on floating-rate loans to individuals; 2% – 6% on some fixed-rate loans |
| NOC / duplicate NOC | Usually free for the first NOC; duplicates may be charged |
| Credit life insurance | Optional; Bank of Baroda gives 0.05% off if you opt in |
Your protections
| Protection | What it means for you |
|---|---|
| Key Facts Statement (KFS) | Mandatory for all retail and MSME term loans since 1 Oct 2024; shows the all-inclusive Annual Percentage Rate (APR), EMI schedule and every fee |
| Charges not in KFS | Cannot be levied without your explicit consent |
| Validity | At least 3 working days for loans of 7 days or more — time to compare offers |
| Floating-rate reset (RBI, Aug 2023) | At a rate reset you can choose a higher EMI, a longer tenure (without negative amortisation), switch to fixed rate, or prepay; you get quarterly statements |
Frequently asked questions
Is GST charged on the processing fee?
Yes, 18% GST applies to processing and other service fees.
Can I negotiate the fee?
Often — banks run seasonal offers (Canara has a 50% fee waiver till 30 Sep 2026) and dealers may absorb fees on tie-up models.
For information and comparison only. Loan terms, rates and rules change — confirm with the lender and read the Key Facts Statement before borrowing.