Car Loan Interest Rates in India

The car loan interest rates you will be charged and the loan amount you will be eligible for will vary by bank, and will depend primarily upon the model of car, the tenure of your loan, your income, your employer, your work experience and your residence stability. Car loan interest rates in India are usually quoted as monthly reducing balance rates, however some lenders quote car loan interest rates as daily reducing balance rates.The simplest way of comparing different car loan offers is to calculate the total amount of money you will need to repay the bank in order to completely pay off your loan.


Car Loan Interest Rates

Bank NameInterest rate rangeRate Type
HDFC Bank Car Loan8.5% to 10.75% fixedMonthly reducing balance
ICICI Car Loan9.75% to 11% fixedMonthly reducing balance
Axis Car Loan9.25% to 12% fixedMonthly reducing balance
Reliance Car Loan10.5% to 12% fixedMonthly reducing balance
SBI Car Loan8% in 1st year. 10% to 11.5% fixed in next yearsDaily reducing balance
Bank of Baroda Car Loan9.75% to 10.25% floatingDaily reducing balance
Canara Bank Car Loan11% fixedDaily reducing balance
Oriental Bank Car Loan11% fixedDaily reducing balance
Punjab National Bank Car Loan11% fixedDaily reducing balance
Union Bank Car Loan11% to 11.25% floatingDaily reducing balance



Your car loan eligibility and car loan interest rate

Both salaried and self-employed people are eligible for car loans, as long as they have steady income. A car loan can be used to purchase either a new car or a used car. Most banks offer car loans which can be repaid over a period of up to 5 years. The loan amount you are eligible for and the car loan interest rate you will be charged are dependent on factors such as income, employment history, car make & model, and whether the car is new or used. Banks typically limit the monthly payment (EMI) on your auto loan to about 50% of your monthly income, and will also cap the overall loan amount to about 80% of the ex-showroom price of your car (This cap may be relaxed for existing customers of a bank, but is stricter for used cars).

Typical fees and charges payable for a car loan

  1. Lenders charge a processing fee of about 1% of the loan amount, but this fee is usually capped.
  2. If you repay your car loan earlier than the agreed time frame, lenders charge a foreclosure penalty of about 4% of the foreclosed loan amount.

Comparing car loan quotes from different banks/NBFCs

  1. Banks quote interest rates in many different ways (ex. monthly reducing rate, flat rate), hence just looking at the interest rate value alone might not give you a true picture of which car loan quote is the best. The processing fee should also be considered when comparing auto loan quotes. The best way of finding out which car loan quote is the cheapest is by comparing the total amount that you need to pay in order to completely pay off your car loan.
    2. Total cost of car loan = Loan amount + Total interest charged throughout loan tenure + Processing fees & related taxes
  2. The amount you are eligible for will vary by bank, hence choose a lender who lends you enough for you to afford the down-payment on the car.
  3. In case you wish to buy your car very quickly, also consider the average time taken by the bank to disburse a car loan.