Car loan rates starting at 7.35%: Check best offers and terms here | Personal Finance
Car loan customers will find annual interest rates below 7.5 per cent, with public sector banks offering some of the cheapest options, according to data compiled by Paisabazaar. UCO Bank has the lowest starting rate in the comparison at 7.35 per cent per annum.
Bank of Maharashtra and Canara Bank follow with rates starting at 7.45 per cent, while Central Bank of India and Indian Bank offer loans from 7.50 per cent. Rates offered vary, based on factors such as credit profile, income, loan amount, vehicle and lender-specific criteria.
The rates and charges in the comparison are as of August 26, 2026.
| Name of Banks/NBFCs | Interest rate (%) p.a. | EMI (Rs) Loan amount-5 lakh Tenure-5 years | Processing fee (% of loan amount) |
| Bank of Baroda | 7.60 – 11.35 | 10,043 – 10,959 | Up to Rs. 2,000 |
| Bank of India | 7.60-12.55 | 10,043 – 11,262 | Up to 0.25% (Rs. 2,500 – Rs. 10,000) |
| Bank of Maharashtra* | 7.45-11.75 | 10,007 – 11,059 | NIL (Limited Period Monsoon Offer) |
| Canara Bank** | 7.45-11.45 | 10,007 – 10,984 | 0.25% ( Rs 1,000 – Rs 5,000) |
| Central Bank of India | 7.50-9.30 | 10,019 – 10,452 | NIL (Till 31.12.2026) |
| Federal Bank | 7.65-9.00 | 10,055 onwards | 1% (Rs. 1,000 – Rs. 50,000) |
| HDFC Bank | 8.15 onwards | 10,174 onwards | Up to 0.5% (Rs. 3,500 – Rs. 8,000) |
| ICICI Bank | 8.40 onwards | 10,234 onwards | Up to Rs. 8,500 |
| IDBI Bank | 7.75-9.30 | 10,078 – 10,452 | Rs 2,500 |
| IDFC FIRST Bank | 8.99 onwards | 10,377 onwards | Up to Rs. 10,000 |
| Indian Bank | 7.50-9.65 | 10,019 – 10,513 | Rs. 1,200 |
| Indian Overseas Bank | 7.55-12.00 | 10,031 – 11,122 | NIL |
| Karnataka Bank | 8.13-11.63 | 10,169 – 11,029 | Up to 0.60% (Rs. 2,500 – Rs. 11,000) |
| Punjab and Sind Bank*** | 7.55-14.05 | 10,031 – 11,647 | 0.25% (Rs. 1,000 – Rs. 15,000) |
| Punjab National Bank | 7.60-10.70 | 10,043 – 10,797 | Up to 0.25% (Rs. 1,000 – Rs. 1,500) |
| State Bank of India | 8.70 – 9.85 | 10,307 – 10,587 | Rs. 500 – Rs. 2,000 |
| UCO Bank | 7.35-10.00 | 9,983 – 10,624 | 0.5% (Max. Rs 5,000) |
| Union Bank of India | 7.50-10.00 | 10,019 – 10,684 | Up to Rs 1,000 |
| *0.25% interest rate concession for existing home loan borrowers and other existing customers having at least 6 months of relationship with the bank. **50% waiver on processing fee till 30th September 2026 ***Concession of up to 50% on processing fee for PSB Apna Vahan Sugam. | |||
| Rates and charges as of 26th August 2026 | |||
| Source: Paisabazaar.com | |||
The difference between lenders can significantly impact the overall cost of borrowing. Paisabazaar’s illustration for a Rs 5 lakh loan for five years shows the EMI ranging from Rs 9,983 at UCO Bank to Rs 11,647 at Punjab and Sind Bank, based on the listed rates.
This means a difference of Rs 1,664 in monthly repayment. Over 60 months, the gap in total EMI outgo can be close to Rs 1 lakh.
PSU banks lead starting rates
Besides UCO Bank, Bank of Maharashtra and Canara Bank offer starting rates of 7.45 per cent. Central Bank of India, Indian Bank and Union Bank of India start at 7.50 per cent.
Some lenders are offering temporary concessions. Bank of Maharashtra is offering a 0.25 percentage point interest concession to existing home loan borrowers and other existing customers with at least six months of relationship with the bank. Canara Bank is offering a 50 per cent waiver on processing fees until September 30, 2026.
Among private banks, HDFC Bank’s rates start at 8.15 per cent, followed by ICICI Bank at 8.40 per cent and IDFC FIRST Bank at 8.99 per cent. State Bank of India’s rates start at 8.70 per cent.
Look beyond the headline rate
Borrowers should not compare loans only on the advertised interest rate or EMI. Processing fees and the total interest payable over the loan tenure also matter.
For example, Central Bank of India lists no processing fee until December 31, 2026, while Indian Overseas Bank also has no processing fee in the comparison. UCO Bank charges 0.5 per cent of the loan amount, capped at Rs 5,000.
Before taking a car loan, borrowers should compare the final rate offered to them, processing charges and total repayment amount across lenders. A shorter tenure may increase the EMI but can reduce the overall interest burden.
