Car Loan Interest Rates 2026: All Banks Compared

Car loan interest rates in India start at about 7.6% a year at public sector banks and about 8.2% at private banks in October 2026. The rate you actually get depends on your credit score, the loan amount, whether the rate is fixed or floating, and whether the car is new, used or electric.

SBI reports that its average auto loan rate for July–September 2026 was 8.9%, which is a realistic figure for a salaried borrower with a good score. RBI raised the repo rate to 5.5% on 7 October 2026, so floating car loan rates linked to the repo rate moved up by about 0.25 percentage points in the days after.

On an ₹8 lakh loan for 5 years, the gap between a good rate and a poor one is large:

Each percentage point adds roughly ₹22,000–25,000 of interest over five years on ₹8 lakh. Put your own numbers into the Car Loan EMI Calculator.

The table lists each bank's starting rate for a new car and, where published, a used car. The starting rate goes to the strongest borrowers; most people pay 0.3–1 point more.

Floating rates at public sector banks are linked to the repo rate, so a rate published before 7 October 2026 is likely 0.25 points higher now. Always confirm the rate in the bank's Key Fact Statement (KFS), which every lender must give you before you sign.

SBI charges 8.55% to 9.50% on new car loans, linked to its 3-month MCLR of 8.40% (updated 15 October 2026). The rate fixed on the day of disbursement stays the same for the whole loan, so SBI car loans do not move with RBI decisions.

• SBI Car Loan, NRI Car Loan, Assured Car Loan: 8.55%–9.50%
• Loyalty Car Loan: 8.50%–9.45%
• Green Car Loan (electric cars): 8.45%–9.50%
• Certified Pre-owned Car Loan: 10.60%–15.75%

Loans longer than 5 years cost 0.10 points more than 3–5 year loans. The full score-wise table is in the CIBIL section below.

HDFC Bank's new car loans start at 8.15% and used car loans at 11.25%, per rates effective from 18 August 2026. HDFC car loans are fixed-rate. Fixed-rate loans can carry foreclosure and part-payment charges, so read that section of the KFS before you sign.

Canara Bank links car loans to its repo-linked lending rate (RLLR), which is 8.25% from 9 October 2026. On top of that it adds a premium based on your credit risk grade:

Women borrowers pay 0.05 points less, so the lowest Canara rate is 7.75% for loans above ₹15 lakh. Because the rate is floating, it changes when RBI changes the repo rate.

Punjab National Bank offers a choice of rate type:

Women borrowers also get 7.60%. Used cars cost 9.45%–10.55% floating. The processing fee is 0.25% of the loan, between ₹1,000 and ₹1,500. There is no prepayment charge on a floating loan; on a fixed loan PNB charges 2% of the amount prepaid.

Bank of Baroda charges 7.60% to 11.30% floating or 8.50% to 11.20% fixed on new cars, with these rates for borrowers who take its optional group credit life insurance; without it, add 0.05 points. It finances up to 90% of the on-road price for up to 84 months, charges a processing fee from ₹500 plus GST, and charges nothing for pre-closure.

Public sector banks have the lowest car loan rates in India, starting at 7.6%–7.8% on floating rates for borrowers with a credit score above 750. PNB, Bank of Baroda, Union Bank and Canara Bank lead on headline rate. Among private banks, HDFC Bank (8.15%) and ICICI Bank (8.35%) are the cheapest. SBI, at 8.55%, is not the cheapest, but its rate is fixed for the whole loan.

The lowest headline rate is not always the cheapest loan. Compare three things side by side:

The Loan Comparison Calculator puts two offers side by side, including the fee.

A credit score of 750 or more gets you the lowest car loan rate at most banks. Below 700, the rate rises sharply and some lenders decline the loan. SBI publishes its full score-wise grid for new car loans:

On ₹8 lakh for 5 years, a score of 800+ (8.55%) against 700–720 (9.30%) means an EMI of ₹16,433 instead of ₹16,723: ₹290 a month, or about ₹17,400 over the loan. If you have no credit history, SBI prices the loan on a separate new-to-credit score instead, at 8.80%–9.15%.

Car loans in India are mostly fixed-rate. SBI and private banks such as HDFC, ICICI, Axis and Kotak lock the rate for the full tenure. Public sector banks such as PNB, Bank of Baroda, Canara and Union Bank also offer floating rates linked to the repo rate.

A 0.25-point repo hike barely moves a floating car loan. On ₹8 lakh at 7.60% for 5 years, a rise to 7.85% after the first year lifts the EMI from ₹16,068 to ₹16,146, which is ₹78 a month. Because a car loan is short, a floating rate that starts a full point lower usually stays cheaper even through a couple of hikes.

Used car loans cost about 2–3 points more than new car loans, because a used car is weaker security. Expect roughly 9.5%–16%, depending on the car's age and your score:

• PNB: 9.45%–10.55% floating
• SBI Certified Pre-owned Car Loan: 10.60%–15.75%
• HDFC Bank: from 11.25%
• Union Bank: from 11.60%

On ₹8 lakh for 5 years, 11.25% against a new-car rate of 8.15% adds ₹72,915 of interest. Banks also usually lend a lower share of a used car's value and allow shorter tenures than on a new car. If the used-car rate you're offered is above 12%, compare it with a personal loan, as explained in Car Loan vs Personal Loan.

Electric car loans are slightly cheaper than petrol and diesel car loans at most banks. SBI's Green Car Loan costs 8.45%–9.50%, 0.10 points below its regular car loan. Canara Bank's Green Vehicle loan starts at 7.70% for loans above ₹15 lakh, and Union Bank quotes 7.50% for EVs. Some banks also waive the processing fee on electric cars.

The discount is small: 0.10 points on ₹8 lakh for 5 years saves about ₹40 a month. Choose the EV because it suits you, not for the loan rate.

Some public sector banks charge women borrowers slightly less on car loans. Canara Bank charges women 0.05 points less at every grade, so its lowest rate for women is 7.75% against 7.80% for other borrowers. PNB lists women among the borrowers who get its best floating rate of 7.60%. If a woman in the family has her own income and a good credit score, ask the bank whether the concession applies when she is the main applicant.

Car loan processing fees in India range from about ₹500 to 0.5% of the loan, plus 18% GST. Public sector banks are usually cheaper:

Private banks and dealer-arranged loans often charge several thousand rupees. On top of the processing fee, expect stamp duty at actuals and documentation charges. Ask for the fee in writing and negotiate it; banks often cut or waive it during festive offers.

From 1 January 2026, banks and NBFCs cannot charge any prepayment or foreclosure fee on a floating-rate loan taken by an individual for personal use. This comes from the RBI (Pre-payment Charges on Loans) Directions, 2025, and applies to loans sanctioned or renewed on or after that date.

Fixed-rate car loans are different. The lender can charge for early closure, provided the charge is shown in the KFS. PNB charges 2% of the amount prepaid on its fixed-rate loans. Private banks commonly charge a few percent of the outstanding principal, with lower charges later in the loan.

Prepaying early saves real money. On ₹8 lakh at 8.55% for 5 years, a ₹1 lakh part-payment after 12 months saves ₹36,959 of interest and ends the loan 8 months early. Even a 2% charge (₹2,000) leaves you well ahead. To see how prepayment cuts interest, read How to Reduce Loan EMI.

This is the EMI for every ₹1 lakh borrowed. Multiply by the number of lakhs in your loan.

Example: ₹9 lakh at 8.5% for 5 years is 9 × ₹2,052 = ₹18,468 a month. A 7-year loan lowers the EMI but costs much more interest. On ₹8 lakh at 8.55%, 7 years costs ₹2,65,902 of interest against ₹1,85,951 for 5 years, which is ₹79,951 more. The formula behind these numbers is explained in How EMI Is Calculated.

A direct bank loan is usually cheaper than dealer finance; the dealer wins only when the carmaker subsidises the rate. Dealers arrange loans through partner banks and carmakers' own finance companies, and earn a commission on each loan. That cost often shows up as a higher rate, a higher fee, or insurance and accessories added into the loan amount.

On ₹8 lakh for 5 years, a dealer-arranged loan at 9.50% against a bank loan at 8.55% costs ₹22,138 more in interest. Dealer finance is worth taking only when it beats your bank's written offer after fees, such as a festive 0% or low-rate scheme. Even then, check whether the cash discount is lower for buyers who take that scheme.

A flat rate is charged on the full loan amount for the whole tenure, even as you repay it, so a flat rate is about 1.8 times the equivalent reducing-balance rate. Some dealers and NBFCs still quote flat rates because they look low.

A "5% car loan" quoted flat costs the same as a 9.15% bank loan. Always ask for the reducing-balance rate or the APR, both of which the KFS must show.