Car loan rates start at 7.35% in mid-Sept: Top offers and EMIs compared | Personal Finance
A car loan can cost more than the sticker price once interest and upfront charges are factored in. Car loan rates start at 7.35 per cent among the lenders tracked by Paisabazaar.com, but the terms you get will depend on the lender, borrower profile and loan terms.
As of September 16, UCO Bank offered the lowest starting rate at 7.35 per cent, followed by Bank of Maharashtra and Canara Bank at 7.45 per cent. Bank of Baroda and Bank of India started at 7.60 per cent.
| 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 | Up to 0.25% |
| 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 | 7.90-9.00 | 10,114 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 | 7.55-9.65 | 10,031 – 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 16th September 2026 | |||
| Source: Paisabazaar.com | |||
What the rates mean for your EMI
For a Rs 5 lakh car loan over five years, the EMI starts at Rs 9,983 at UCO Bank based on the rates in the Paisabazaar.com data. At Bank of Maharashtra and Canara Bank, the starting EMI is Rs 10,007.
At the other end, Punjab and Sind Bank’s listed rate range goes up to 14.05 per cent, translating into an EMI of Rs 11,647 for the same Rs 5 lakh, five-year loan.
The difference may appear small in monthly terms, but it can add up over the full loan period. Borrowers should therefore compare the total interest payable rather than looking only at the EMI.
Processing fees can add to the cost
The interest rate is not the only cost to check. Processing fees
vary considerably across lenders.
Central Bank of India and Indian Overseas Bank have listed nil processing fees, while UCO Bank charges 0.5 per cent, subject to a maximum of Rs 5,000. HDFC Bank’s processing fee is up to 0.5 per cent, while Federal Bank charges 1 per cent, subject to its stated minimum and maximum limits.
Some lenders are also offering temporary concessions. Bank of Maharashtra provides a 0.25 percentage point interest concession to certain existing customers, while Canara Bank is offering a 50 per cent waiver on its processing fee until September 30, 2026.
Do not choose a loan only on the starting rate
A lender’s lowest advertised rate may not be the rate offered to every borrower. Credit profile, income, relationship with the lender, vehicle and other eligibility factors can affect the final pricing.
Before taking a car loan, compare the final sanctioned interest rate, processing fee, total interest outgo, foreclosure or prepayment terms and any other applicable charges. A slightly higher EMI may sometimes come with lower upfront charges, making the overall borrowing cost more relevant than the headline rate.
