Buying a car these days is not a dream, but a necessity. Everyone knows how convenient it is to commute in your own car in heavy traffic. But before taking a car loan, the biggest problem is which bank is giving the best interest rate?
There may be a slight fluctuation in car loan rates in 2025, considering the inflation and changing trends in RBI’s repo rates, but I will tell you which are the top banks offering the lowest rates, what are their features, and what you should look at while choosing a loan. This post is a complete guide for you, covering everything with data-based and practical tips. Let’s get started.
First, I will give you a simple table with short specs of top banks – like interest rates, tenure, and loan amount percentage. This data has been taken from the latest bank updates like official sources of BankBazaar and HDFC.
Top Banks for Car Loan: Quick Comparison
| Bank Name | Key Specs (Interest Rate, Tenure, Loan % of On-Road Price) |
|---|---|
| State Bank of India (SBI) | Interest Rate: 8.65% onwards, Tenure: Up to 7 years, Loan: Up to 90% |
| Punjab National Bank (PNB) | Interest Rate: 8.75%-8.95%, Tenure: Up to 7 years, Loan: Up to 90% |
| HDFC Bank | Interest Rate: 8.75% onwards, Tenure: Up to 7 years, Loan: Up to 100% |
| ICICI Bank | Interest Rate: 8.95% onwards, Tenure: Up to 7 years, Loan: Up to 100% |
| Bank of Baroda | Interest Rate: 8.80%-11.95%, Tenure: Up to 7 years, Loan: Up to 90% |
| Canara Bank | Interest Rate: 8.80%-11.95%, Tenure: Up to 7 years, Loan: Up to 90% |
| Axis Bank | Interest Rate: 9.00% onwards, Tenure: Up to 8 years, Loan: Up to 85% |
| Union Bank of India | Interest Rate: 8.70% onwards, Tenure: Up to 7 years, Loan: Up to 85% |
| Federal Bank | Interest Rate: 9.25% onwards, Tenure: Up to 7 years, Loan: Up to 100% |
| Karnataka Bank | Interest Rate: 9.00% onwards, Tenure: Up to 7 years, Loan: Up to 85% |
This table gives you a quick overview. Interest rates are calculated on daily reducing balance, and depend on CIBIL score, income, and car type. For example, if your CIBIL is above 750, you can get the lowest rate.
Car Loan Details 2025
There has been no major change in car loan rates in 2025, but some banks have increased rates by 0.5-1% due to RBI repo rate hikes. Still, the average rates are between 8.65% to 11.95%. If you are buying a new car, the rates will be lower compared to used cars. For used cars the rates are usually 1-2% higher, starting from 9.5%.
Take SBI – This is the most popular option as the trust factor is high due to being a government bank. Their starting rate is 8.65% and tenure can go up to 7 years. If your salary account is in SBI, you can also get loyalty discount. Loan amount is up to 90% of the on-road price of the car, which covers registration, insurance and accessories.
PNB and HDFC are also competitive. HDFC provides 100% financing, meaning you do not have to worry about down payment if you are eligible. Their processing is fast and EMI calculator is available on their website which you can easily calculate.
ICICI Bank – Their rates start from 8.95% and they offer lower rates for electric vehicles – like up to 8.50% – as they are promoting green initiatives. Tenure is flexible and there is no prepayment penalty if your credit score is good.
Bank of Baroda and Canara Bank are also solid options, especially for government employees, for whom there are special schemes. In BoB, rates start from 8.80% and there is no penalty on foreclosure if you close with your own funds.
Things to Look at Before Choosing a Loan
- Interest rate
- Processing fees (usually 0.5-1% of loan amount)
- Tenure and foreclosure charges
- CIBIL score (750+ preferred for lowest rates)
- Income type – salaried get better rates than self-employed
Rates for used cars are slightly higher, starting from 9.00%, and the age of the car should not be more than 3-5 years. Banks like ICICI and SBI are offering special lower rates for electric vehicles as the government is pushing EVs. Loan amount is usually 80-100% of the on-road price, depending on bank.
EMI Calculation
Calculating EMI is very simple. Suppose you are taking a loan of 10 lakhs at 8.75% rate for 5 years, then the EMI will be around 20,000 rupees. There are EMI calculators on the websites of banks, such as HDFC and SBI, which you can easily check. Some banks charge a penalty for making a prepayment, but if you pay with your own funds most of your time is free.
If you are an NRI or an agriculturist, there are special schemes like in Karnataka Bank, where rates start from 9.00% and loan is up to 85%. There are options for businesses too, like car loan for employees.
You should compare before availing a loan. On sites like BankBazaar you can see rates of multiple banks at one place. And always check your credit score – if it is low, improve it first so that you get better rates.
After knowing all this, you must be feeling that availing a car loan is now easy. Now let’s see the answers to some common questions.
FAQs on Top Banks for Car Loan in India 2025
Which is the best bank for car loan?
SBI and HDFC are the top choices as their rates are lowest (8.65%-8.75%) and processing is fast.
What are the car loan interest rates in 2025?
Rates start from 8.65% (SBI) and can go up to 11.95%, depending on credit score and tenure.
Can I get loan for used car?
Yes, banks like PNB and ICICI give loans for cars (3-5 years old), rates are 1-2% higher than new cars.
How to calculate car loan EMI?
There are EMI calculators on banks’ websites. Example: Rs 10 lakh loan at 8.75% rate for 5 years – EMI ~Rs. 20,000.
Are there special rates for electric vehicles?
Yes, banks like ICICI and SBI offer lower rates (up to 8.50%) for EVs due to government incentives.
