Car Loan Interest Rates 2026
Compare new car loan rates of SBI, HDFC Bank, ICICI Bank, Axis Bank, Canara Bank, PNB, Bank of Baroda and Union Bank, work out your EMI and down payment on the real on-road price, and understand fixed vs floating rates, foreclosure charges, hypothecation and how to get your RC cleared after the last EMI.
RBI repo rate 5.25% · Lender rates checked 27 September 2026Car Loan interest rates — 8 lenders compared
Published starting and maximum rates for each lender. The RBI repo rate is 5.25% after cuts totalling 1.25 percentage points in 2025, so floating-rate loans linked to the repo rate are cheaper than a year ago. The rate you are offered depends on your credit score, income, employer and loan details.
| Lender | Interest rate (p.a.) | Processing fee | Tenure | EMI per ₹1 lakh* | Rates as of |
|---|---|---|---|---|---|
| Canara Bank Car LoanPublic sector bank | 7.45% – 15.00% | 0.25% of loan (min ₹1,000, max ₹5,000) + GST; 50% waiver from 1 Jul to 30 Sep 2026 | Up to 84 months (7 years) | ₹2,001 | 12 Dec 2025 (official range) |
| Bank of Baroda Car LoanPublic sector bank | 7.60% – 11.30% | Up to ₹10 lakh: ₹1,500 + GST; above ₹10 lakh: ₹2,000 + GST; ₹500 + GST for government / PSU employees | Up to 84 months (7 years) | ₹2,009 | Sep 2026 (official page, undated) |
| PNB Car LoanPublic sector bank | 7.60% – 9.70% | 0.25% of loan (min ₹1,000, max ₹1,500) + GST | Up to 84 EMIs (7 years) | ₹2,009 | Sep 2026 (aggregator; RLLR 1 Jul 2026) |
| Union Bank of India Car LoanPublic sector bank | 7.60% – 10.00% | ₹1,000 + GST (aggregator); often waived for electric vehicles | Up to 84 months (7 years) | ₹2,009 | 24 Jul 2026 |
| HDFC Bank Car LoanPrivate sector bank | 8.15% onwards | 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 | 12 – 84 months | ₹2,035 | 18 Aug 2026 (aggregator) |
| ICICI Bank Car LoanPrivate sector bank | 8.40% onwards | Up to ₹8,500 + GST | 12 – 84 months | ₹2,047 | 1 Jun 2026 |
| SBI Car LoanPublic sector bank | 8.40% – 9.35% | Up to ₹5 lakh: ₹500 (salaried) / ₹750 (others); ₹5 – 10 lakh: ₹1,000 / ₹1,250; above ₹10 lakh: ₹1,500 / ₹2,000 — all + GST | Up to 7 years (Green Car Loan up to 8 years) | ₹2,047 | 16 Sep 2026 |
| Axis Bank Car LoanPrivate sector bank | 8.95% – 11.75% | ₹3,500 – ₹5,500 + GST | 12 – 96 months (up to 8 years) | ₹2,073 | Sep 2026 (aggregator) |
* At the lowest rate for 5 years. Starting rates go to borrowers with strong credit scores and income; your rate depends on your profile. Sources and dates on each lender page — confirm with the lender before applying.
EMI calculator
More: EMI calculator · Eligibility calculator · Affordability calculator · Prepayment calculator
How tenure changes your EMI and interest
| Tenure | EMI | Total interest | Total repaid |
|---|---|---|---|
| 3 years | ₹25,440 | ₹1,15,832 | ₹9,15,832 |
| 4 years | ₹19,908 | ₹1,55,586 | ₹9,55,586 |
| 5 years | ₹16,607 | ₹1,96,401 | ₹9,96,401 |
| 6 years | ₹14,420 | ₹2,38,271 | ₹10,38,271 |
| 7 years | ₹12,871 | ₹2,81,186 | ₹10,81,186 |
₹8,00,000 at 9.00%.
How your down payment changes the loan
| Down payment | You pay upfront | Loan | EMI | Total interest |
|---|---|---|---|---|
| 0% | ₹0 | ₹10,00,000 | ₹20,758 | ₹2,45,501 |
| 10% | ₹1,00,000 | ₹9,00,000 | ₹18,683 | ₹2,20,951 |
| 20% | ₹2,00,000 | ₹8,00,000 | ₹16,607 | ₹1,96,401 |
| 30% | ₹3,00,000 | ₹7,00,000 | ₹14,531 | ₹1,71,851 |
| 40% | ₹4,00,000 | ₹6,00,000 | ₹12,455 | ₹1,47,301 |
On-road price ₹10,00,000 at 9.00% for 5 years. Each extra 10% down saves about ₹24,550 of interest. Down payment guide →
Special schemes and green (EV) car loans
| Lender | Scheme | Rate | Key feature |
|---|---|---|---|
| SBI Car Loan | SBI Green Car Loan | 8.30% – 9.35% | 25 bps below regular car loan; up to 100% on-road; 3 – 8 years |
| Union Bank of India Car Loan | Union Green Miles | 7.50% – 9.90% | Processing fee often waived for EVs |
| Canara Bank Car Loan | Green vehicle loan | Concessional EV rates | Within the Canara Vehicle scheme |
| HDFC Bank Car Loan | EV car loan | As per offer | Finance for electric cars |
- GST on electric cars stays at 5%, versus 18% for small petrol/diesel cars and 40% for larger cars after the GST 2.0 changes of 22 Sep 2025 (compensation cess removed).
- Section 80EEB (deduction of EV loan interest up to ₹1.5 lakh) covered only loans sanctioned from 1 Apr 2019 to 31 Mar 2023 — it is not available on new EV loans.
- Many states cut or waive road tax and registration fees for EVs; check your state’s current EV policy before comparing on-road prices.
Other special schemes
| Lender | Scheme / feature | Details |
|---|---|---|
| Canara Bank Car Loan | Green vehicle loan | Separate lower rates for electric vehicles |
| Canara Bank Car Loan | Women borrowers | 0.05% concession (aggregator) |
| Canara Bank Car Loan | Fee offer | 50% processing-fee waiver till 30 Sep 2026 |
| Bank of Baroda Car Loan | Home loan customers | 0.25% rate concession for existing Bank of Baroda home-loan borrowers |
| Bank of Baroda Car Loan | Group Credit Life Insurance | 0.05% lower rate if you opt for GCLI |
| Bank of Baroda Car Loan | bob Digital Car Loan | Online journey with up to 93% funding |
| PNB Car Loan | PNB Digi Car Loan | Online application and sanction |
| PNB Car Loan | PNB Pride car loan | Scheme for eligible PNB Pride customers (government employees) |
| Union Bank of India Car Loan | Union Green Miles (EV) | 7.50% – 9.90% for electric cars |
| HDFC Bank Car Loan | EV car loan | Finance for electric cars |
| HDFC Bank Car Loan | Loan against car | Borrow against a car you already own |
| ICICI Bank Car Loan | Pre-approved car loans | Instant offers for eligible ICICI Bank customers |
| ICICI Bank Car Loan | Pre-owned car loan | Separate used-car product from 9.75% onwards |
| SBI Car Loan | SBI Green Car Loan (EV) | 8.30% – 9.35% — a 25 bps concession for electric cars, up to 100% on-road funding, 3 – 8 years |
| SBI Car Loan | Loyalty Car Loan | 8.35% – 9.30% for eligible existing SBI customers |
| SBI Car Loan | Assured Car Loan | 8.40% – 9.35% |
| SBI Car Loan | NRI Car Loan | 8.40% – 9.35% for non-resident Indians |
| SBI Car Loan | Flexi Pay | Lower EMIs in the early part of the loan |
| Axis Bank Car Loan | 8-year tenure | Lowers the EMI, but raises total interest sharply |
On-road price breakdown — worked example
| Component | How it is charged | Example |
|---|---|---|
| Ex-showroom price | Includes GST (18% or 40% by car size, 5% for EVs) | ₹10,50,000 |
| Road tax + registration | Set by the state — often a percentage of ex-showroom that rises with price and fuel type (assumed 10% here) | ₹1,05,000 |
| Insurance (year 1) | Comprehensive own-damage + mandatory 3-year third-party cover for new cars (assumed) | ₹45,000 |
| TCS @ 1% | Only if price exceeds ₹10 lakh (Sec 206C(1F)); claimable against your tax | ₹10,500 |
| Accessories, FASTag, extended warranty | Optional — negotiate or skip (assumed) | ₹15,000 |
| On-road price | ₹12,25,500 |
Illustrative figures for a car with an ex-showroom price of ₹10,50,000; road tax and insurance are assumptions — your state’s road-tax slab and insurer quote decide the real numbers. At 80% funding of this on-road price the loan would be ₹9,80,400. On-road price guide →
New car loan vs used car loan
| Point | New car loan | Used car loan |
|---|---|---|
| Starting rate | 7.45% – 8.40% at major banks | About 9.45% (PNB floating) to 12.50%+ at NBFCs; SBI 10.45% – 15.60% |
| Funding | Up to 85% – 100% of on-road price | Usually 75% – 85% of valuation (PNB 75%, SBI 85%) |
| Tenure | Up to 7 years (8 at Axis, SBI Green) | Usually up to 5 years; car age + tenure capped (e.g. SBI 10 years) |
| Processing fee | Flat ₹500 – ₹8,500 or 0.25% – 0.5% | Higher — SBI 1.5% (max ₹10,000), BoB 0.5%, NBFCs up to 2.95% |
| Valuation | Invoice price | Lender’s valuer or IDV decides the value |
| Paperwork | Dealer invoice; new RC with hypothecation | RC transfer (Form 29/30) plus hypothecation (Form 34) |
A used car costs less upfront but the loan costs more per rupee. See used car loan rates and our new vs used guide.
Total cost of owning a financed car
| Cost | Amount |
|---|---|
| Down payment | ₹2,00,000 |
| EMIs: ₹16,607 × 60 | ₹9,96,401 |
| — of which interest | ₹1,96,401 |
| Processing fee 0.5% + GST | ₹4,720 |
| Insurance (5 years at an assumed ₹25,000 a year) | ₹1,25,000 |
| Total paid over 5 years | ₹13,26,121 |
On-road price ₹10,00,000, loan ₹8,00,000 at 9.00% for 5 years. Financing adds ₹2,01,121 in interest and fees. Fuel or charging, servicing, tyres, parking and tolls come on top, and the car loses value every year. Total cost calculator →
EMI per ₹1 lakh
| Rate | 3 yrs | 4 yrs | 5 yrs | 6 yrs | 7 yrs |
|---|---|---|---|---|---|
| 8.00% | ₹3,134 | ₹2,441 | ₹2,028 | ₹1,753 | ₹1,559 |
| 8.50% | ₹3,157 | ₹2,465 | ₹2,052 | ₹1,778 | ₹1,584 |
| 9.00% | ₹3,180 | ₹2,489 | ₹2,076 | ₹1,803 | ₹1,609 |
| 10.00% | ₹3,227 | ₹2,536 | ₹2,125 | ₹1,853 | ₹1,660 |
| 11.00% | ₹3,274 | ₹2,585 | ₹2,174 | ₹1,903 | ₹1,712 |
EMI for every ₹1 lakh borrowed. Multiply by your loan amount in lakh.
Car Loan eligibility
- Indian residents (and NRIs at some banks, e.g. SBI NRI Car Loan); minimum age usually 18 – 21, with an upper age limit at loan maturity set by each bank
- Salaried, self-employed professionals, business owners and (at PSU banks) agriculturists
- Minimum income typically ₹3 lakh a year (SBI, HDFC Bank, Canara) or ₹25,000 net a month (PNB)
- Credit score: the lowest rates need 750–800+; Bank of Baroda needs at least 701
- Total EMIs (including the new car loan) usually within about 50% of net income
- Car must be registered in the borrower’s name with the bank’s hypothecation noted on the RC
Documents required
- Application form with photographs
- KYC: PAN (mandatory) and Aadhaar / passport / voter ID / driving licence
- Income proof — salaried: last 3 salary slips and Form 16; self-employed: 2 years’ ITR with computation, P&L and balance sheet
- Bank statements for the last 6 months
- Proforma invoice / quotation from the dealer showing on-road price
- Employment or business continuity proof
- After purchase: RC copy with hypothecation, insurance policy naming the bank, and final invoice
How to apply
- Pick the car and get a quoteAsk the dealer for an itemised on-road quotation — ex-showroom, road tax, registration, insurance, TCS and accessories.
- Compare offersCheck rate, rate type (fixed / floating), processing fee, foreclosure charges and the APR in each lender’s Key Facts Statement.
- ApplyOnline, through the bank app, at a branch or at the dealership; many banks give pre-approved offers to existing customers.
- SanctionThe bank checks your credit report, income and the car’s price, then issues a sanction letter and KFS.
- Sign and pay marginSign the loan agreement, set up NACH/e-mandate for EMIs and pay your down payment to the dealer.
- Disbursal and registrationThe bank pays the dealer directly; the RTO registers the car with the bank’s hypothecation on the RC. Submit the RC and insurance copies to the bank.
RBI rules that protect you
| 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 |
Prepayment & foreclosure
| Situation | Rule |
|---|---|
| Floating-rate loans to individuals (non-business) | No prepayment / foreclosure charge — any lender, part or full, from any source of funds |
| Loans sanctioned or renewed from 1 Jan 2026 | RBI (Pre-payment Charges on Loans) Directions, 2025 also bar charges on floating-rate business loans to individuals and MSEs at most banks and large NBFCs; no minimum lock-in |
| Fixed-rate loans | Lender may charge as per the sanction letter and Key Facts Statement |
| Disclosure | Any charge must be shown in the sanction letter, loan agreement and KFS; waived charges cannot be levied later |
Car Loan guides, calculators & lenders
Rates & lenders
Compare rates, fees and rate types
Calculators
EMI, eligibility, affordability and prepayment
How car loans work
Types, eligibility, documents, credit score and applying
Price, down payment & costs
On-road price, down payment, LTV, insurance and total cost
Closure, hypothecation & RC
Foreclosure, NOC, Form 35 and RC transfer
Frequently asked questions
Which bank offers the cheapest car loan in 2026?
Among the eight banks we track, Canara Bank has the lowest official starting rate (7.45%, a range covering all vehicles), followed by PNB, Bank of Baroda and Union Bank at 7.60% on repo-linked floating loans. HDFC Bank (8.15% onwards per aggregators), SBI (8.40%) and ICICI Bank (8.40%) lead among the rest. Starting rates need a high credit score — 825+ at Union Bank, 800+ at SBI.
What is the EMI on an ₹8 lakh car loan?
At 9% for 5 years the EMI is about ₹16,607 and total interest about ₹1,96,401. At 8.5% it falls to ₹16,413; stretching to 7 years at 9% cuts the EMI to ₹12,871 but raises interest to ₹2,81,186.
How much down payment do I need for a car?
Several banks fund up to 100% of the on-road price for select models (SBI, HDFC Bank, ICICI Bank, Axis Bank), while others keep a margin: Canara 10% – 20% by loan size, PNB 15% (10% with tie-ups), Bank of Baroda 10%. Putting down 20% or more keeps the EMI and interest lower and avoids owing more than the car is worth in the first years.
Fixed or floating — which is better for a car loan?
Floating loans at PSU banks (PNB, Bank of Baroda, Union, Canara) are linked to the repo rate (5.25%) and carry no prepayment charge for individuals, so you can close early free. Fixed loans (common at private banks) protect you if rates rise but charge 2% – 6% for foreclosure. If you may prepay, floating usually wins.
Can I close my car loan early?
Yes. Floating-rate car loans to individuals have no foreclosure charge under RBI rules. Fixed-rate loans carry charges set in the KFS — e.g. HDFC Bank 6%/5%/3% by year, ICICI 3%/2% and nil after 24 months, Axis 5%, Bank of Baroda 2% above ₹40,000 in the first 2 years.
How do I remove the bank’s name from my RC after the last EMI?
Collect the NOC and Form 35 (signed by the bank) and apply to your RTO — online through the Vahan / Parivahan “Hypothecation Termination” service — with the RC, insurance, PUC and ID. The RTO issues a fresh RC without the hypothecation; then ask your insurer to remove the bank’s name from the policy.
Is TCS charged on buying a car?
Yes. If the car’s price exceeds ₹10 lakh, the dealer collects 1% TCS under Section 206C(1F). It is not a cost: it appears in Form 26AS / AIS against your PAN and is adjusted against your income tax or refunded when you file your return.
Can I claim tax benefits on a car loan?
Salaried individuals get no deduction for a personal car loan. Section 80EEB (interest up to ₹1.5 lakh on electric-vehicle loans) applied only to loans sanctioned between 1 Apr 2019 and 31 Mar 2023 and only under the old tax regime. Self-employed people using the car for business can claim interest and depreciation as business expenses.
Does the car insurance have to name the bank?
Yes. Third-party cover is mandatory by law, and lenders require comprehensive insurance for the loan tenure with the bank noted as hypothecatee, so a total-loss claim is paid to the bank first. Keep the policy renewed — a lapse can be treated as a breach of the loan terms.
Rates compiled from lenders’ published rate pages and reputable aggregators (dates on each lender page) for comparison only. FinancePortal is not a lender or financial adviser; confirm terms and read the Key Facts Statement before borrowing.