Car loan interest rates in India range from approximately 8.45% per annum and differ by lender and borrower profile. As per the RBI (Reserve Bank of India) repo rate reduction to 6.25% in February 2025, several banks have adjusted their lending rates accordingly.
For example, the Bank of Maharashtra offers car loans starting at 8.45% and has waived processing fees to make borrowing more affordable. Borrowers with higher credit scores can easily qualify for better rates.
Keep reading till the end to understand all about car loan interest rates to make the right loan choice.
| As of May 2025, car loan interest rates in India typically range from 8.45% per annum and vary depending on the lender, loan amount, and the applicant’s credit profile. |
Best Car Loan Interest Rates by Banks
Here are some of the top car loan interest rates offered by some of the top banks of India:
| Bank | Interest Rate (% per annum) |
|---|---|
| HDFC Bank | From 9.40% |
| State Bank of India (SBI) | 9.20% to 10.15% |
| Canara Bank | From 8.70% |
| Federal Bank of India | 9% to 9.50% |
| Axis Bank | From 9.40% |
| Bank of Baroda | 8.80% to 11.50% |
| ICICI Bank | From 9.1% |
| Central Bank of India | 8.35% to 9.80% |
| UCO Bank | 8.20% to 10.50% |
Interest rates are subject to change.
Types of Car Loan Interest Rates
Generally, there are 2 types of car loan interest rates in India – fixed and floating. Let’s have a look at each of them:
| Feature | Fixed Interest Rate | Floating Interest Rate |
|---|---|---|
| Meaning | Remains unchanged throughout the loan tenure | Fluctuates based on benchmarks like the RBI’s repo rate or the bank’s lending rate |
| EMI | Remains the same and offers easy budget planning | May increase or decrease during the loan period |
| Suitability | Individuals who prefer stability | Borrowers who can manage the result of potential rate cuts |
Used Card Loan Interest Rates
Below you will find a list of all the top banks and the respective loan interest rates for pre-owned cars.
| Bank | Interest Rates (% per annum) |
|---|---|
| Axis Bank | 13.55% to 15.80% |
| HDFC Bank | 14.50% to 17.50% |
| State Bank of India | 11.75% to 15.25% |
| Federal Bank of India | 12% to 14.5% |
| Canara Bank | 7.70% to 10.30% |
| ICICI Bank | From 11.25% |
Interest rates are subject to change.
Car Loan Processing Fees
The processing fee for car loans is as follows:
Processing Fee (₹)
| Banks | New Cars | Old/Pre-owned Cars |
|---|---|---|
| Axis Bank | Up to ₹1500 + GST | 1.25% of Loan Amount + GST |
| HDFC Bank | Up to 1% of Loan Amount subject to a minimum of ₹3500 & maximum of ₹9000 | No information available |
| Federal Bank of India | From ₹2000 to ₹4,500 | ₹3,500 to ₹5,500 |
| ICICI Bank | Up to 2% of loan amount + applicable GST | Up to 2% of loan amount + applicable GST |
| State Bank of India | ₹750 + GST | 1.25% of Loan Amount + GST |
| Central Bank of India | 0.50% of loan amount + GST | 0.50% of loan amount + GST |
| UCO Bank | 0.50% of the loan amount + GST | 0.50% of the loan amount + GST |
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Factors Affecting Car Loan Interest Rates
The car loan interest rates in India are influenced by several key factors such as:
- Credit Score: A higher credit score, typically above 750, shows responsible financial behavior, leading lenders to offer lower interest rates.
- Loan Tenure: Shorter loan durations often come with lower interest rates but higher monthly payments, while longer tenures may have higher rates but lower EMIs.
- Income and Employment Stability: A stable income and consistent employment history demonstrate financial reliability, making lenders more likely to offer favorable interest rates.
- Vehicle Age and Type: Newer vehicles typically attract lower interest rates than used cars, as lenders consider them less risky.
- Down Payment: Making a substantial down payment reduces the loan amount, which can result in lower interest rates and total interest paid over the loan term.
- Debt-to-Income Ratio: A lower ratio suggests better financial health, increasing the chances of securing a loan at a competitive interest rate.
- Relationship with Lender: Existing customers with a good repayment history may receive preferential interest rates due to established trust.
- Economic Indicators: Factors such as the Reserve Bank of India’s repo rate influence lending rates; a decrease in the repo rate can lead to lower car loan interest rates.
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Car Loan EMI Calculator
Your Amortization Schedule (Yearly/Monthly)
The Car loan EMI calculator by Buddy Loan is an easy-to-use calculator and provides your monthly payment amount in just seconds. With several banks offering car loans at different interest rates, you can immediately calculate the EMIs by yourself via this tool.
All you need to do is simply enter your loan amount, interest rate, and loan tenure. The monthly amount is generated automatically, free of cost.
EMI for Car Loan
Let’s assume the car loan interest rate at 8.60%, as it is the current starting rate in India. Using an online EMI Calculator, here are the loan amounts and the respective EMIs.
Car Loan EMI Calculation
| Personal Loan Amount | 1 Year | 2 Year | 3 Year |
|---|---|---|---|
| 1 Lakh | ₹8,727 | ₹4,550 | ₹3,161 |
| 2 Lakh | ₹17,453 | ₹9,100 | ₹6,323 |
| 3 Lakh | ₹26,180 | ₹13,650 | ₹9,484 |
| 4 Lakh | ₹34,906 | ₹18,201 | ₹12,646 |
| 5 Lakh | ₹43,633 | ₹22,751 | ₹15,807 |
| 6 Lakh | ₹52,360 | ₹27,301 | ₹18,968 |
| 7 Lakh | ₹61,086 | ₹31,851 | ₹22,310 |
| 8 Lakh | ₹69,813 | ₹36,401 | ₹25,291 |
| 9 Lakh | ₹78,539 | ₹40,951 | ₹28,453 |
| 10 Lakh | ₹87,266 | ₹45,501 | ₹31,614 |
| 15 Lakh | ₹1,30,899 | ₹68,252 | ₹47,421 |
| 20 Lakh | ₹1,74,532 | ₹91,003 | ₹63,228 |
| 25 Lakh | ₹2,18,165 | ₹1,13,754 | ₹79,035 |
| 30 Lakh | ₹2,61,798 | ₹1,36,504 | ₹94,842 |
| 50 Lakh | ₹4,36,330 | ₹2,27,507 | ₹1,58,069 |
Impact of Credit Score on Car Loan Interest Rates
Banks generally use applicants’ credit scores to measure their repayment capacity and financial stability.
The higher the credit score, the greater the chances of qualifying for loans at low interest rates. Credit scores can also help determine your creditworthiness and spending behavior. This helps banks to understand whether you fall into the high-risk or low-risk category.
In the case of a low credit score, the interest rates can not only be higher, but the applicant will most likely face loan rejections.
The table below provides an overview of the credit score range and the respective impact on car loan interest rates.
| Credit Score Range | Impact |
|---|---|
| Below 600 | Very High Risk |
| 600-699 | High Risk |
| 700-749 | Moderate Risk |
| 750-900 | Low Risk |
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