Car Loan Interest Rates in India 2026: Banks Compared

Last reviewed: 10 October 2026. Rates and charges checked on each bank’s official website. See how we rate loans.

Car loan interest rates in India start at around 7.5% a year at public sector banks in October 2026, while private banks generally start a little higher. The rate you actually get depends on your credit score, the loan amount, the tenure and, at several banks, whether you choose a fixed or floating rate. This guide compares what major banks publish today and shows what a typical loan costs.

Car loan interest rates compared (October 2026)

Rates are the banks’ published ranges and can change at any time. HDFC Bank’s 9.00% is its rack rate; the bank also discloses that its auto loans carried interest rates from 7.60% to 14.00% (average 8.63%), without stating the period. Axis Bank prices new car loans at a fixed rate over its 3-year MCLR, with no reset. Kotak Mahindra Bank is not listed because its car loans are offered through Kotak Mahindra Prime, a separate NBFC.

What a car loan actually costs

Here is a worked example for a ₹8 lakh car loan over 5 years, using rates from the low, middle and high end of the table:

The gap between 7.60% and 11.70% is about ₹96,000 over five years, and even 7.60% against 9.35% is worth about ₹40,000. Fees matter too: on this ₹8 lakh loan HDFC Bank’s 0.5% fee is ₹4,000, while Axis Bank’s fee of up to 2% could reach ₹16,000 plus GST (₹18,880). Stretching the same ₹8 lakh loan to 7 years at 8.40% cuts the EMI to ₹12,629 but raises total interest to ₹2,60,836. A shorter tenure costs more each month and much less overall. Try your own numbers with our EMI calculator.

What decides your car loan rate

Credit score

Most banks now publish rates by credit score band. At PNB, for example, a CIBIL score of 750 or more gets the lowest floating rate, while 681 to 699 costs about two percentage points more. Union Bank asks for a minimum CIBIL of 700 to process a car loan.

Fixed or floating

Floating rates at public sector banks are linked to their repo-linked lending rate, so they move when the RBI changes the repo rate. Fixed rates stay the same for the whole loan. SBI’s car loan rate is fixed at disbursement. Bank of Baroda and PNB let you choose. Axis Bank’s car loans are fixed for the whole term.

Loan amount and tenure

Canara Bank charges less on loans above ₹15 lakh. ICICI Bank charges more for loans under 36 months. Most banks lend for up to 7 years.

Electric cars

Several banks price electric car loans slightly lower. SBI’s Green Car Loan starts at 8.30%, PNB’s e-vehicle rate starts at 7.60%, Canara Green Vehicle loans start at 7.45% above ₹15 lakh, and Union Green Miles starts at 7.75%.

How much can you borrow

SBI and ICICI Bank say they can fund up to 100% of the on-road price, including registration and insurance. Bank of Baroda lends up to 90% of the on-road price and Canara Bank up to 90% depending on the amount. PNB normally needs a 15% margin, which is lower under its dealer tie-ups.

Prepayment and foreclosure

• Floating-rate loans at public sector banks: Bank of Baroda, PNB, Canara Bank and Union Bank do not charge individuals for prepaying floating-rate car loans.
• SBI: no prepayment penalty, and no foreclosure charge after 2 years.
• ICICI Bank: 3% plus GST on part-prepayment within 24 months; foreclosure 3% plus GST in the first year, 2% plus GST in the second year, nil after that.
• HDFC Bank: foreclosure 6% of principal outstanding within a year of the first EMI, 5% in months 13 to 24 and 3% after that; loans taken on or after 1 December 2025 pay a flat 5%. Part payment is allowed twice in the tenure, once a year, up to 25% of the outstanding principal.
• Axis Bank: foreclosure 5% of principal outstanding plus GST, and 5% plus GST on any part payment; no lock-in period. Overdue EMIs attract penal charges of 8% a year.
• Fixed-rate loans: Bank of Baroda and PNB charge 2% on many fixed-rate prepayments. Check the terms before you choose a fixed rate.

Checklist before you apply

1. Check your credit score; a score of 750 or more usually unlocks the lowest rate.
2. Compare the all-in cost: rate, processing fee plus 18% GST, and insurance.
3. Ask whether the dealer’s tie-up rate is lower than the bank’s branch rate.
4. Pick the shortest tenure you can comfortably afford.
5. Read the prepayment and foreclosure terms, especially on fixed-rate loans.
6. Look for festive fee waivers; PNB and Canara Bank are waiving processing fees until 31 December 2026.

Frequently asked questions

Which bank has the lowest car loan interest rate?

Among the banks we checked, Canara Bank (from 7.55% for loans above ₹15 lakh), Bank of Baroda (floating from 7.60%) and PNB (from 7.65%) publish the lowest starting rates. You need a strong credit score to get them.

Is a fixed or floating car loan better?

A floating rate falls when the RBI cuts rates and usually has no prepayment penalty. A fixed rate gives a predictable EMI. If you plan to prepay, floating is usually cheaper.

Can I get a 100% car loan?

SBI and ICICI Bank say they fund up to 100% of the on-road price for eligible borrowers. Others lend 85% to 90%.

Are electric car loans cheaper?

Yes, at several banks. SBI, PNB, Canara Bank and Union Bank publish slightly lower rates for electric vehicles.

Is GST charged on car loan fees?

Yes. Processing fees and most other charges attract 18% GST, so add that when comparing offers.

Related: compare personal loan rates, home loan rates and gold loan rates across banks. For the bank pages we used, see SBI’s car loan scheme.

This article is for informational purposes only and does not constitute financial advice. Loan rates change often; confirm the latest terms with the bank before you apply.