Car loan rates start at 7.35%: How EMIs compare across top banks in India | Personal Finance

Borrowers planning to finance a new vehicle can access car loans at interest rates starting as low as 7.35 per cent, although the actual rate—and monthly EMI—depends on factors such as the lender, credit profile and loan tenure.

According to data from Paisabazaar.com as of July 22, 2026, UCO Bank offers the lowest starting interest rate among major lenders at 7.35 per cent per annum, followed by Canara Bank and Bank of Maharashtra at 7.45 per cent, and Union Bank of India, Punjab and Sind Bank, and Indian Bank at 7.50 per cent.

For a Rs 5 lakh car loan with a five-year tenure, the EMI ranges from Rs 9,983 at the lowest interest rate to over Rs 11,600 for borrowers paying the highest rates.

Public sector banks continue to dominate the lowest-rate segment, with most offering starting rates below 7.75 per cent.

How much can your EMI vary?

While headline rates appear close, the EMI difference becomes more pronounced at higher interest rates.

• 
  Lowest EMI: UCO Bank — Rs 9,983
• 
  Highest EMI: Punjab and Sind Bank — Rs 11,634 (at its maximum lending rate of 14%)

The gap between the lowest and highest EMI works out to Rs 1,651 a month. Over a five-year loan, that translates into nearly Rs 99,000 in additional repayments.

Public vs private banks

Among private lenders:

• 
  HDFC Bank starts at 8.15%
• 
  ICICI Bank at 8.40%
• 
  IDFC FIRST Bank at 8.99%
• 
  Federal Bank at 7.65%
• 
  Karnataka Bank at 8.14%

Although their starting rates are generally higher than those of public sector banks, the final interest rate depends on factors such as the borrower’s credit score, employment profile and relationship with the bank.

Don’t ignore processing fees

Some notable charges include:

• 
  Indian Overseas Bank: Nil processing fee
• 
  Union Bank of India: Up to Rs 1,000
• 
  Federal Bank: Up to 1% of the loan amount (maximum Rs 50,000)
• 
  IDFC FIRST Bank: Up to Rs 10,000
• 
  Central Bank of India: Up to 0.5% (maximum Rs 20,000)

Meanwhile, some lenders are offering limited-period concessions. Canara Bank is providing a 50% waiver on processing fees until September 30, 2026, while Punjab and Sind Bank offers a concession of up to 50% on processing fees under its PSB Apna Vahan Sugam scheme. Bank of Maharashtra also offers a 0.25 percentage point interest rate concession to eligible existing customers.

What borrowers should compare

Borrowers should evaluate more than just the advertised interest rate. Before taking a car loan, compare:

Interest rate offered based on your credit profile

Processing fees and other upfront charges

Prepayment or foreclosure charges

Maximum loan amount and tenure

Special concessions for existing customers

Even a small difference in interest rates can translate into substantial savings over the life of the loan, making it worthwhile to compare offers across lenders before finalising financing.