Current car loan interest rates — all banks
Tap a column header to re-sort. The rate column shows the bank's starting rate for top-tier salaried borrowers (CIBIL 760+); the typical sanctioned rate runs 50–200 bps above. Foreclosure column shows the standard charge for closing the loan early — read against the bank type, because PSU banks running floating-rate car loans honour the RBI no-charge rule, while private banks running fixed-rate loans don't.
| Bank | Type | Rate (%) | Foreclosure (%) | Notes |
|---|---|---|---|---|
| Kotak Mahindra Bank | Private | 9.50 | 5.00 | Published starting ~9.50% p.a.; range 7.70–25% across profiles (aggregator-cited floor is profile-specific, not rack-card). 0.50% rate discount if down payment ≥ 20%. Processing fee up to 2% (min ₹2,500) + GST. Prepayment allowed after 6 months; foreclosure typically 5% — not surfaced on a single canonical official page, cross-checked with aggregators. |
| Axis Bank | Private | 8.95 | 5.00 | New-car range 8.95–11.75% p.a. (some sources cite 8.90–11.80%). 5% foreclosure and 5% part-prepayment of outstanding principal. Up to 100% on-road funding, tenure 12–96 months. Processing fee ₹3,500–₹12,000 + ₹700 stamp duty. Rates effective May 2026. |
| SBI | Public sector | 8.80 | 3.00 | Range 8.80–9.80% for new car. Green / EV car 8.75–9.45%. Used car ~10.45%. Processing fee 0.40% (min ₹1,000, max ₹7,500 + GST). Salaried min income ₹3L p.a. Rates effective May 2026. |
| HDFC Bank | Private | 8.75 | 6.00 | Starting 8.75% p.a. for CIBIL 760+ salaried; upper end ~9.40%+. Tiered foreclosure: 6% within 1y, 5% in 13–24m, 3% after 24m on outstanding principal. Part-prepayment limited to 2 instances and 25% of outstanding. Used car loans priced higher. Rates effective May 2026. |
| Canara Bank | Public sector | 8.70 | 0.00 | Range 8.70–11.95% p.a. for new car (women borrowers 8.90–9.45%, others 8.95–9.55% per current rate card; lowest tier 8.70%). Up to 90% financing for new vehicles. Fixed rate, daily reducing balance. No foreclosure charges on standard car loan; up to 2% may apply on some used-car variants. Rates effective May 2026. |
| ICICI Bank | Private | 8.50 | 5.00 | New-car rates start 8.50% p.a. (range ~8.50–9.15%+). Foreclosure 5% + GST on outstanding within 24-month lock-in; nil after 24 months. Min prepayment = 1 EMI, max 25% of outstanding, allowed twice during tenure with 12-month gap. Rates effective May 2026. |
| PNB | Public sector | 7.60 | 0.00 | Range ~7.60–10.70% p.a. for new cars (floor applies to top-tier credit / RLLR-linked). Defence / paramilitary 7.30% new / 8.30% used. Women borrowers get concessional rates. No prepayment charges on floating-rate loans / when paid from own sources; up to 2% otherwise. PNB NIRMAAN 2025 campaign: 5 bps concession + nil processing/documentation fee. Rates effective May 2026. |
| Bank of Baroda | Public sector | 7.60 | 0.00 | Floating rate starts 7.60% p.a. (cut 30 bps Feb 2026); fixed starts ~8.50%. Upper end ~10.70%. Up to 90% on-road finance, tenure up to 84 months. Zero foreclosure / part-payment charges on floating-rate car loans for individual borrowers. Interest computed on daily reducing balance. Used-car premium typically +1–2%. Rates effective May 2026. |
Rates verified on 2026-05-17. Source: Bank websites + 2026 rate aggregators (BankBazaar, CreditMantri, ClearTax, ZeeBiz, Goodreturns); researched 2026-05-17. Refresh next: 2026-08-17.. Bank rates change frequently — confirm on the bank's official page before applying or depositing.
PSU vs private — the foreclosure-charge split
The headline starting rates among PSU and private lenders are within ~150 bps of each other, so the cheaper bank on rate isn't always the cheaper bank overall — the prepayment policy can swamp the rate difference if you plan to close or transfer the loan early.
- PSU lenders running floating-rate car loans (PNB, Bank of Baroda, Canara Bank) charge zero foreclosure for individual borrowers. They're covered by the RBI Pre-payment Charges on Loans Directions, 2025 — applicable to all floating-rate loans to individuals sanctioned or renewed from 1 January 2026. PNB's NIRMAAN 2025 campaign layers a further 5 bps rate concession plus nil processing fee.
- Private lenders default to fixed-rate and price the foreclosure penalty in: HDFC tiered 6% / 5% / 3% (within 1y / 13–24m / after 24m), ICICI 5% with a 24-month lock-in, Axis 5%, Kotak ~5%. These charges apply on the outstanding principal — on a ₹8 lakh outstanding, a 5% penalty is ₹40,000, which can wipe out 12–18 months of rate-cut savings on a balance transfer.
- SBI is the in-between case — runs floating but applies a legacy 3% foreclosure charge that pre-dates the 2025 Directions. Worth confirming at sanction whether your specific SBI car loan picks up the new RBI rule (sanctions from 1 January 2026 onwards) or continues under the older 3% regime.
The practical implication: if you might sell the car, switch lenders, or settle the loan early in the first 24 months, the PSU floating-rate option can be materially cheaper than a 50–100 bps lower fixed-rate quote from a private bank. If you'll definitely run the loan to maturity, the rate difference dominates and the lowest-rate quote wins.
Why most car loans are fixed-rate
Car loans differ from home loans in two ways that push the market toward fixed pricing: the tenure is short (5–7 years vs 20–30 for housing), and the absolute interest amount is small (a 25 bps move on a ₹8 lakh / 5-year loan changes the EMI by ~₹100/month, vs ₹800–900 on a ₹50 lakh / 20-year home loan). The interest-rate risk over a 5-year window is modest, so banks find fixed quoting operationally cleaner and borrowers don't push hard for floating.
Lenders that do offer floating-rate car loans (PNB, BoB on request, sometimes Canara) typically price 25–50 bps below their fixed-rate quote and link to their RLLR / EBLR. Worth asking explicitly at the time of sanction — the trade-off is EMI variability with each RBI MPC reset, in exchange for a lower headline rate and the zero-foreclosure entitlement.
The broader fixed-vs-floating regime is covered in the Fixed vs Floating Loans guide with the EBLR mechanics and the full RBI repo-rate history.
Eligibility and CIBIL thresholds
Most banks publish a single starting rate and a wide rack-card range (e.g. SBI 8.80–9.80%, Axis 8.95–11.75%). The exact rate offered to you sits inside that range based on the underwriter's read of your profile:
- CIBIL 760+ — typical floor; you get the published starting rate or very close to it.
- CIBIL 700–759 — usually 25–100 bps above floor.
- CIBIL 650–699 — 100–250 bps above floor, sometimes capped at the bank's mid-tier band.
- Below 650 — often declined; if approved, priced at the top of the rack card.
Beyond CIBIL, lenders look at: debt-to-income ratio (existing EMI commitments + this proposed EMI shouldn't exceed ~50% of monthly take-home), age of credit history (longer is better — 5+ years of clean repayment is the sweet spot), recent hard inquiries (more than 3 inquiries in 6 months counts against you), and any banking relationship (salary credit, FD, existing loan in good standing at the same bank typically earns 5–25 bps off the rack card).
New vs used car interest rates
Used-car loan rates run 100–250 bps higher than new-car at the same lender — the asset depreciates faster, the loan-to-value floor is tighter (typically 70–80% of dealer-assessed value vs 85–90% of on-road for new), and the borrower segment is mixed. Representative numbers from the May 2026 rate cards: SBI used ~10.45% vs new ~8.80%; PNB used 8.30% vs new 7.30% (defence/paramilitary segment, unusually small premium). Used-car tenure is also capped tighter — typically 5 years and not extending past 8 years of vehicle age at maturity.
Green / EV car loans frequently get a 25–50 bps discount as part of the bank's ESG positioning — SBI prices EVs at 8.75–9.45% vs 8.80–9.80% for ICE-equivalent. Worth asking even if not advertised, especially at the festival-season negotiation stage.
The headline rate isn't the full cost
Three line items routinely add 0.5–2% to the effective cost of the loan, and they're often glossed over at sanction:
- Processing fee — typically 0.40–2.00% of the loan amount (capped between ₹3,500 and ₹12,000 + GST at most banks). PSU banks frequently waive this during promotional windows; private banks rarely do.
- Documentation + stamp duty — ₹700–₹2,500 at most lenders; smaller line item but adds up.
- Loan-protect insurance bundled at disbursement — a single-premium credit-life insurance, financed into the loan principal at a 1–2% surcharge. Usually marketed as "mandatory" but in fact optional; declining it can save ₹15,000–₹40,000 over the loan life on a typical car loan ticket.
Once you've picked a rate and tenure, the Car loan EMI calculator shows the monthly EMI, total interest, and full amortization schedule. The On-road price calculator handles the full ex-showroom + RTO + insurance + TCS build-up so the loan amount is anchored to the actual cheque you'll write, not the brochure price.