Car Loan in India: Rates, EMI Calculator and Banks (November 2026)

How a car loan works in India in 2026

A car loan is a secured term loan. The lender pays the dealer, you repay in equal monthly instalments, and the car stays hypothecated to the lender until the last EMI clears. Because the car is the security, the rate is lower than on an unsecured loan. What you pay depends on the type of car, the rate basis and how much you borrow.

New, used and electric cars are priced differently

New cars get the lowest rates. Across the 30 lenders we read on 9 November 2026, new-car floors run from 7.70% to 9.75% p.a. Used cars cost more and are funded less: 28 lenders publish a used-car rate, from 7.75% p.a. at Canara Bank to 36% p.a. at the top.

Electric cars often get a small concession. 13 lenders print a separate EV rate, the lowest 7.55% p.a. at Punjab & Sind Bank, and several waive the processing fee on EV schemes. The electric car loan guide compares all 13.

Fixed or floating

Public sector banks mostly lend at floating rates linked to the RBI repo rate through their RLLR or EBLR. The repo rate is 5.50% after the RBI's 7 October 2026 rise of 25 basis points, so a floating EMI can move at the next quarterly reset. Axis Bank, IndusInd Bank, Saraswat Bank and SBI lend at fixed rates; many PSU banks offer both. Fixed protects you from rises; floating, on a personal car loan, carries no prepayment charge under RBI rules, which we come to below.

Funding share and tenure

Most PSU banks fund up to 90% of the on-road price (ex-showroom plus registration, road tax and insurance) and expect a 10% margin from you. HDFC Bank, ICICI Bank, SBI, Axis Bank and Yes Bank advertise up to 100% on-road funding, usually for selected models and strong profiles. Tenure is 7 years (84 months) at most lenders, 8 years at CSB Bank, HDFC Bank and Yes Bank, 10 at IDFC FIRST Bank, and 5 at City Union Bank. This page covers personal car loans only; taxis, trucks, tractors and two-wheelers are not included.

Reading the car loan rate table the right way

The table above shows each lender's new-car band and the condition attached to its floor.

A floor is an offer to one kind of borrower

The low number in each band is the rate for the lender's favourite profile, not the rate most applicants get. UCO Bank's 7.70% p.a. needs a CIBIL score of 825 or more. Union Bank of India asks for 825, or 800 to 824 if you are salaried. SBI's 8.55% p.a. needs 800 and above plus a tenure of 3 to 5 years. Canara Bank's 7.75% p.a. is for women borrowers in its top risk grade borrowing above ₹15 lakh; others start at 7.80% p.a.

Read the condition before the number. Bank of Baroda publishes 7.85% to 11.55% p.a. with a cut-off score of 701 and no per-score grid, so you learn your rate only at sanction.

A PSU floor and a private-bank floor are not the same offer

PSU bands are narrow and tied to a public benchmark: Indian Overseas Bank runs 7.85% to 8.85% p.a., one percentage point wide. Private banks and NBFCs price on the borrower's whole profile and the car model, so their bands are wide or open-ended. HDFC Bank and ICICI Bank print "8.40% onwards" with no ceiling, and IndusInd Bank's 8.98% to 17.96% p.a. is the widest band in the table. Five lenders, Kotak Mahindra Bank and Bajaj Finance among them, print no new-car starting rate; Bajaj Finance and AU Small Finance Bank give only a ceiling.

Tenure also shifts the rate at some private lenders: ICICI Bank starts at 8.40% p.a. beyond 36 months but 10.25% p.a. for shorter loans. A private "from" rate is often a long-tenure rate for a prime profile. A PSU floor is a rule you can test against your own score.

What a car loan costs in rupees

Take a ₹10 lakh loan. At the lowest floor of 7.70% p.a., the EMI over 5 years is ₹20,133. You repay ₹12,07,987 in all, so the interest is ₹2,07,987, about a fifth of what you borrowed.

Stretch the same loan to 7 years and the EMI falls to ₹15,437: ₹20,133 minus ₹15,437 is ₹4,696 less a month. But interest climbs to ₹2,96,722, and ₹2,96,722 minus ₹2,07,987 is ₹88,735 more. Pick the shortest tenure your budget can hold.

Rate matters too, though less than people expect. At the median floor of 8.50% p.a. the 5-year EMI is ₹20,517 and the interest ₹2,30,992. The gap to the lowest floor is ₹20,517 minus ₹20,133, or ₹384 a month, and ₹2,30,992 minus ₹2,07,987, or ₹23,005 over the loan. Worth having, but a 2% processing fee on the same loan is ₹20,000, which eats most of that.

Fees change the real cost

Processing fees run from a few hundred rupees to several per cent. SBI charges salaried borrowers ₹500 plus GST up to ₹5 lakh and ₹1,500 plus GST above ₹10 lakh; Union Bank of India takes a flat ₹2,000 plus GST. HDFC Bank's fee is up to 0.5%, never below ₹3,500 or above ₹8,000, so ₹5,000 on ₹10 lakh. Axis Bank lists up to 2% plus GST and Bandhan Bank up to 4%, which on ₹10 lakh is ₹40,000. PNB, Canara Bank, Central Bank of India and UCO Bank's pre-qualified variant each print a full waiver running to 31 December 2026; a waiver only saves money if the rate behind it is competitive. The processing fee guide lists every lender's charge.

How to choose the right car loan

Six steps, in order.

1. Know your score first. Most PSU floors switch on at 800 or 825. Below 750, the headline floors are not for you.
2. Decide fixed or floating. Floating spares you the prepayment charge and follows the repo rate down as well as up. Fixed buys certainty, but check the exit cost: HDFC Bank charges 5% of the principal outstanding on loans taken from 1 December 2025, and ICICI Bank 3% in year one, 2% in year two, nil after 24 months.
3. Compare the total cost, not the EMI. Add the processing fee and GST to the interest over your real tenure.
4. Match the funding share to your down payment. With 10% of the on-road price saved, almost every lender fits. With less, you need a 100% funder, and the rate will reflect the extra risk.
5. Ask what your own bank gives you. Government and PSU employees get a 5% margin at Punjab & Sind Bank, or nil with a salary account there. Existing home-loan borrowers get nil margin at Bank of Maharashtra and PNB's 7.90% p.a. floor on its Insta Vehicle Loan.
6. Read the Key Facts Statement before you sign. Its APR includes every charge; compare that, not the brochure rate.

Common mistakes

• Treating the dealer's finance desk as the only choice. Dealers push the lenders that pay them, so get one quote from your own bank first.
• Stretching to 7 years to make the EMI fit. On ₹10 lakh at 7.70% p.a. that means ₹2,96,722 of interest against ₹2,07,987 over 5 years.
• Skipping the foreclosure clause on a fixed-rate loan. A 5% charge on ₹8 lakh outstanding is ₹40,000.
• Signing on the day the Key Facts Statement is handed over. You have at least three working days to read it.

What to check before you apply

The Key Facts Statement

Since 1 October 2024 every lender must give you a Key Facts Statement (KFS) before you sign a retail loan, in a language you understand. It shows the amount, tenure, EMI, the rate and its type, the total interest, every fee including third-party charges such as insurance, the net amount you receive and the repayment schedule.

The KFS holds good for three working days at least; accept within that window and the lender is bound by it. Any charge not in the KFS cannot be added later without your explicit consent. Read it at home, not at the dealership.

The APR

The KFS also shows the Annual Percentage Rate, which folds the processing fee and other charges into the rate. Two loans at the same 8.50% p.a. can show different APRs once a 2% fee is counted, so compare APRs, not brochure rates.

Prepayment and foreclosure

The RBI's 2025 directions on pre-payment charges say a floating-rate loan taken by an individual for a non-business purpose carries no prepayment or foreclosure charge, in part or in full, whatever the source of the money and without a lock-in. That covers a personal car loan sanctioned on or after 1 January 2026. Whether a charge applies must be written into the sanction letter, the agreement and the KFS.

Fixed-rate loans are outside the ban, so the charge follows the lender's policy. This is why Axis Bank, HDFC Bank, IndusInd Bank and SBI still list foreclosure charges while PSU banks on floating rates print nil. If you may sell or upgrade within a few years, that one clause can matter more than a 0.25% difference in rate.

Other rules worth knowing

• If your floating rate resets upward, the lender must offer a bigger EMI, a longer term or both, and must let you prepay. Since 1 October 2025 a switch to a fixed rate is at the lender's option, not your right.
• After full repayment the lender must release your documents and the hypothecation within 30 days or pay you ₹5,000 for each day of delay that is its fault. A complaint it does not settle within 30 days can go to the RBI Ombudsman, free, on helpline 14448.

Our car loan eligibility guide covers what lenders ask about age, income and employment.

Where to go next

The car loan EMI calculator lets you change the amount, rate and tenure and see the interest in rupees. The interest rates page has the full table of all 30 lenders with filters, and the lowest rate page ranks the floors with their conditions. Buying pre-owned? The used car loan page covers the 28 lenders that price them. To set lenders side by side, use the comparison tool, or open any lender's own page from the table above.