With car prices climbing higher every year, financing a new vehicle has become increasingly important. The good news is that some banks now offer zero-down payment car loans, covering 100% of the on-road price for select models. This means you can drive your dream car without the immediate burden of a down payment.
However, before you rev up your engines, it’s crucial to navigate the maze of loan options available. By understanding the interest rates, processing fees, and other charges associated with car loans, you can make an informed decision and ensure your new car doesn’t become a financial burden.
Car Loan Interest Rates of Top Banks
| Name of banks | Interest rate (%) | EMI (Rs) | Processing fee |
| UCO Bank | 8.45 – 10.55 | 10,246 – 10,759 | Nil |
| Union Bank of India | 8.70 – 10.45 | 10,307 – 10,735 | ₹1,000 |
| Canara Bank | 8.70 – 12.70 | 10,307 – 11,300 | 0.25% (Maximum ₹2,500) |
| Bank of Maharashtra | 8.70 – 13.00 | 10,307 – 11,377 | 0.25% (Rs. 1,000 – Rs. 15,000) |
| Punjab National Bank | 8.75 – 10.60 | 10,319 – 10,772 | 0.25% (Rs. 1,000 – Rs. 1,500) |
| State Bank of India | 8.75 – 9.80 | 10,319 – 10,554 | Up to ₹1,500 |
| South Indian Bank | 8.75 onwards | 10,319 onwards | 0.75% (Max: ₹10,000) |
| IDBI Bank | 8.80 – 9.60 | 10,331 – 10,525 | ₹2,500 |
| Bank of Baroda | 8.85 – 12.70 | 10,343 – 11,300 | Up to ₹2,000 |
| Bank of India | 8.85 – 10.85 | 10,343 – 10,834 | 0.25% (Rs. 1,000 – Rs. 5,000) |
| Indian Overseas Bank | 8.85 – 12.00 | 10,343 – 11,122 | 0.50% ( ₹500 – ₹5,000) |
| Federal Bank | 8.85 onwards | 10,343 onwards | ₹2,000 – ₹4,500 |
| Punjab and Sind Bank | 8.85 – 10.25 | 10,343 – 10,685 | 0.25% (Rs. 1,000 – Rs. 15,000) |
| Karnataka Bank | 8.88 – 11.37 | 10,350 – 10,964 | 0.60% ( ₹3,000 – ₹11,000) |
| ICICI Bank | 9.10 onwards | 10,403 onwards | Up to 2% |
| HDFC Bank | 9.20 onwards | 10,428 onwards | 0.50% ( ₹3,500 – ₹8,000) |
| IDFC First Bank | 9.75 onwards | 10,562 onwards | Up to ₹10,000 |
| City Union Bank | 14.45 – 14.95 | 11,751 – 11,882 | 1.25% (Min: ₹1,000) |
Car loan interest rates are influenced by various factors. Higher income often results in better rates, especially for salaried employees, although self-employed professionals with substantial earnings can also benefit. Loan tenure impacts rates, with longer terms typically carrying higher interest due to increased risk. Younger borrowers tend to receive better terms since they have more time to repay.
Also read: Need Education Loan? Learn Interest Rates, Eligibility and More
A strong relationship with the bank, such as being a long-term client, can lead to preferred rates. The type of vehicle also matters; new cars from reputable manufacturers generally attract lower rates than older models. Adding a co-applicant can improve repayment potential and secure lower rates. Employment at a reputable company can lead to better loan conditions, and a larger down payment can help negotiate lower interest rates. Finally, existing liabilities and investments are considered; fewer liabilities often result in more favorable terms.