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Car Loan Interest Rates – All Banks Compared 2026

By Harsh Porwal · Updated

The lowest floating rate we can verify from a bank's own rate card in 2026 is 7.60% p.a. at Bank of Baroda, with private lenders starting from around 8.4%, in a side-by-side comparison across SBI, HDFC, ICICI, Axis, Kotak, PNB, Bank of Baroda, and Canara Bank. The other thing this table surfaces: PSU lenders charge zero foreclosure on the floating-rate variant, while private lenders default to fixed and charge 3–6% to prepay early.

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 BankPrivate9.505.00Published 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 BankPrivate8.955.00New-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.
HDFC BankPrivate8.756.00Starting 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.
SBIPublic sector8.703.00New-car fixed rate from 8.70% p.a. (range 8.70–9.85%); SBI page last updated 01-07-2026. Green/EV car 8.75–9.85%. Used / certified pre-owned 10.45–15.60%. Processing fee 0.40% (min ₹1,000, max ₹7,500 + GST). Salaried min income ₹3L p.a.
Canara BankPublic sector8.700.00Advertised card rate ~8.70% p.a. for new cars. NOTE a genuine discrepancy: Canara's own 'Interest Rate Range on Loans' disclosure shows Canara Vehicle contracted at 7.45%–15.00% (mean 9.09%) w.e.f. 12.12.2025 – that is the range of loans actually contracted, not the advertised starting card rate, so the two measure different things. Canara's product page publishes no headline number. No foreclosure charge on floating-rate loans.
ICICI BankPrivate8.405.00New-car rates from 8.40% p.a. for tenures above 36 months (10.25% onwards for tenures under 36 months), effective from 1 June 2026 per ICICI's own page. Foreclosure 5% + GST on outstanding within the 24-month lock-in; nil after 24 months. Min prepayment = 1 EMI, max 25% of outstanding, allowed twice during tenure with a 12-month gap.
PNBPublic sector7.600.00⚠ UNVERIFIED: the 7.60% floating figure is aggregator-sourced (BankBazaar) and is NOT corroborated by PNB. PNB publishes no car-loan rate table on its reachable rate pages, and its own RLLR is 8.10% w.e.f. 01.07.2026 (repo 5.25% + mark-up 2.50% + BSP 0.35%) – a 7.60% floating car loan would price 50 bps below PNB's own external benchmark, which is implausible under the EBLR framework. Re-verify against a PNB branch/primary document before relying on this row. No prepayment charges on floating-rate loans.
Bank of BarodaPublic sector7.600.00Floating rate from 7.60% p.a., confirmed from Bank of Baroda's own card: BRLLR 7.90% w.e.f. 06.12.2025 (repo 5.25% + mark-up 2.65%), new car floating priced from BRLLR −0.30%. Fixed new car from 8.50%. 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 on daily reducing balance.

Rates verified on 2026-07-26. Source: Each lender's own rate card where reachable (Bank of Baroda, SBI, ICICI, Canara), corroborated with aggregators (BankBazaar, CreditMantri, ClearTax, Goodreturns) elsewhere. Reviewed 2026-07-26; RBI repo held at 5.25% at the June 2026 MPC (next decision 5 Aug 2026). CAUTION: the PNB row (7.60%) is aggregator-only and is contradicted by PNB's own RLLR of 8.10% w.e.f. 01.07.2026 - see that row's notes. Canara's own disclosure shows vehicle loans contracted from 7.45%, below the 8.70% advertised card rate quoted here; the two measure different things. Next review: 2026-10-26.. 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.

Frequently asked questions

Among the major lenders reviewed July 2026, PSU banks lead on the headline starting rate: Bank of Baroda starts at 7.60% p.a. floating for top-credit salaried borrowers (confirmed from its own card – BRLLR 7.90% w.e.f. 06.12.2025, new car priced at BRLLR −0.30%), with Canara advertising ~8.70% though its own disclosure shows vehicle loans contracted from 7.45%. PNB is widely quoted at 7.60% but publishes no car-loan rate table and its own RLLR is 8.10%, so treat that figure with caution. Private banks are higher – ICICI from 8.40%, HDFC from 8.75%, SBI 8.70%, Axis 8.95%, Kotak ~9.50%. The starting rate is for the best-credit segment (CIBIL 760+, salaried, often with a banking relationship); typical sanctioned rates run 50–200 bps above the floor. The bigger differentiator across lenders is usually the prepayment/foreclosure policy and the processing-fee structure, not the headline rate.

The vast majority of car loans in India are fixed-rate. The 5–7 year tenure is short enough that lenders find it operationally simpler to quote a fixed rate, and most borrowers prefer EMI certainty over the chance of saving on rate cuts. A few PSU banks (PNB, BoB) explicitly offer a floating-rate option linked to their RLLR – when sanctioned floating, the same loan typically prices 25–50 bps below the fixed-rate quote, and benefits from the RBI no-foreclosure-charge rule for individual borrowers under the 2025 Directions. Worth asking explicitly at the time of sanction whether the lender will quote floating.

The split is sharp and worth knowing before you sign. PSU banks (PNB, BoB, Canara) typically charge zero foreclosure on the floating-rate variant – under the RBI Pre-payment Charges on Loans Directions, 2025 (effective for sanctions / renewals from 1 January 2026), all floating-rate loans to individual borrowers attract no prepayment/foreclosure penalty. Private banks usually default to fixed-rate, which is outside the RBI rule: HDFC charges tiered 6%/5%/3% (within 1y / 13–24m / after 24m), ICICI 5% with a 24-month lock-in, Axis and Kotak ~5%. SBI sits in between at 3% (it runs floating with a legacy charge). If you expect to prepay or rotate to a new lender mid-loan, the foreclosure policy difference can outweigh a 50 bps rate gap on a 5-year loan.

Roughly 760+ for the best published starting rate at most lenders; 750+ for an acceptable rate at almost any mainstream bank. Below 700 you'll either be declined or quoted 200–400 bps above the floor (sometimes priced as the highest band on the rack card). Lenders look at the full credit profile, not just CIBIL – debt-to-income ratio, age of credit history, recent inquiries, and existing EMI commitments all feed into the final rate. A salaried borrower with a banking relationship at the same bank (salary credit, FD, existing loan in good standing) often gets 5–25 bps off the rack card.

Yes, typically by 100–250 basis points. New car loans price off the bank's standard rack card; used-car loans price higher because (a) the asset depreciates faster and the loan-to-value floor is tighter, (b) the borrower segment skews to slightly higher risk on average, and (c) the resale market for repossessed used cars is less liquid than for repossessed new cars. SBI used-car ~10.45% vs new ~8.80%; PNB defence used 8.30% vs new 7.30% (an unusually small premium). Green / EV car loans frequently get a discount (SBI 8.75–9.45% for EVs) as part of the bank's ESG positioning.

Standard maximum is 7 years (84 months) at most banks for new cars; some lenders go to 8 years on premium-segment cars. Used-car loan tenure is capped tighter – typically 5 years and not extending past 8 years of vehicle age at maturity. Longer tenure reduces the EMI but increases the total interest paid; the sweet spot for most new-car loans is 5 years, which keeps the EMI manageable without paying for 7 years of interest on an asset that's 50%+ depreciated by year 5.

It can, modestly. Kotak Mahindra Bank offers a 0.50% rate discount if your down payment is ≥ 20% of on-road price; similar implicit discounts exist at other lenders, often surfaced only at the negotiation stage rather than on the public rate card. Higher down payment also shrinks the loan-to-value, which lets the bank price the loan at the tighter end of its underwriting band. The bigger benefit of a 20%+ down payment isn't the headline rate cut though – it's avoiding the loan running negative-equity (you owe more than the car is worth) in year 1–2 when depreciation is sharpest.

Public rate cards are revised every 1–3 months at most lenders. PSU banks tend to wait for the next RBI MPC outcome before passing on movement; private banks reprice more opportunistically based on funding cost and competitive pressure. Promotional rates and festival-period concessions (Diwali, year-end, March-end fiscal close) often shave 25–50 bps off the published rate for 4–6 weeks at a time – worth timing a planned purchase around. We review the rate table on this page quarterly; figures here were last reviewed on 2026-07-26 and the next review is scheduled for 2026-10-26.