What is the current car loan interest rate in India 2025?

Indicative rates range from ~9.5% p.a. for top banks to 14%+ for NBFCs, depending on borrower profile.

How can I get the lowest car loan interest rate?

Improve credit score, make higher down payment, choose shorter tenure and compare lenders; use pre-approved offers.

Are dealer finance rates higher than banks?

Dealer finance may have promotional lower rates for short tenures; always check total cost including processing fee.

Is balance transfer for car loan possible?

Yes, you can switch to a lower-rate lender via balance transfer; processing and foreclosure charges may apply.

Best Car Loan Interest Rates in India 2025 | Top Banks EMI & Comparison Guide

1. Introduction

English: Buying a car is a major financial decision and for most buyers a car loan is necessary. In 2025, Indian banks and NBFCs offer competitive car loan interest rates, flexible tenures and tailored products for salaried individuals, self-employed customers and first-time buyers. Choosing the best car loan with the lowest interest rate and reasonable processing fees can save you lakhs over the loan tenure. This guide compares the best car loan interest rates in India 2025, explains EMI calculations, loan types, charges, eligibility, and provides practical tips to secure a low-rate loan.

हिंदी: कार खरीदना ज़्यादातर लोगों के लिए एक बड़ा फैसला होता है और इसके लिए कार लोन लेना आवश्यक हो जाता है। 2025 में बैंक और NBFCs बेहतर ब्याज दरें, लचीली अवधि और अलग-अलग products दे रहे हैं। सही कार लोन चुनने से आप EMI और कुल interest में बड़ी बचत कर सकते हैं। इस गाइड में हम 2025 के टॉप कार लोन रिज़र्स की तुलना करेंगे और बतायेंगे कि सबसे कम ब्याज कैसे प्राप्त करें।

2. What is a Car Loan? (कार लोन क्या है?)

English: A car loan is a secured loan offered by banks or NBFCs to finance the purchase of a vehicle. The car acts as collateral, and borrowers repay the loan in equated monthly installments (EMIs) over a fixed tenure. Interest can be fixed or floating depending on lender and product.

हिंदी: कार लोन एक secured loan है जिसमें बैंक या NBFC कार खरीदने के लिए पैसे देते हैं और कार को collateral के रूप में रखते हैं। ऋणी EMI के रूप में निश्चित अवधि में किस्तों में भुगतान करता है। ब्याज fixed या floating हो सकता है।

3. Types of Car Loans in India 2025

New Car Loan — Financing for brand-new cars with competitive rates and periodic offers.
Used/Pre-owned Car Loan — Slightly higher rates; lender evaluates car age and condition.
Loan Against Car — Refinancing or loan using car as security for other needs.
Dealer Finance — On-the-spot finance through dealer tie-ups (often promotional rates for short tenure).
Top-up Car Loan — Additional loan on existing car loan for urgent funds (rare and approval-based).

Tip: New car loans typically offer the lowest rates and best tenure options; compare bank vs NBFC offers before finalizing.

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4. Best Car Loan Interest Rates in India 2025 — Comparison Table

Lender	Interest Rate (p.a.)	Tenure	Processing Fee	Special Notes
State Bank of India (SBI)	9.50% – 10.25%	1–7 years	0.35% – 1% (min ₹499)	Lowest for salaried with good CIBIL
HDFC Bank	9.75% – 11.00%	1–6 years	₹999 – ₹2,499	Quick approvals, dealer tie-ups
ICICI Bank	9.70% – 11.25%	1–7 years	0.5% – 1%	Flexible top-ups & balance transfer
Axis Bank	9.90% – 11.50%	1–7 years	₹999 onwards	Pre-approved offers via salary account
Mahindra Finance (NBFC)	10.25% – 13.00%	1–6 years	1% – 2%	Strong used-car portfolio
Tata Capital	10.00% – 12.00%	1–6 years	Varies	Attractive for dealer-finance

Rates are indicative and subject to borrower profile, loan amount, city and credit score. Always verify latest rates on lender websites.

5. Top 10 Car Loan Offers with Details (Benefits, Interest, Eligibility)

1) State Bank of India (SBI)

Interest: 9.50% – 10.25% p.a. Benefits: Low rates for salaried, long tenure options up to 7 years, balance transfer facility. Eligibility: Salaried & self-employed with good CIBIL.

2) HDFC Bank

Interest: 9.75% – 11.00% p.a. Benefits: Fast sanction, dealer tie-ups, EMI holiday options sometimes. Eligibility: Salaried employees, minimum income thresholds apply.

3) ICICI Bank

Interest: 9.70% – 11.25% p.a. Benefits: Flexible tenor, prepayment options, special offers for existing customers.

4) Axis Bank

Interest: 9.90% – 11.50% p.a. Benefits: Competitive for salaried, quick disbursal via payroll partnerships.

5) Mahindra Finance (NBFC)

Interest: 10.25% – 13.00% p.a. Benefits: Strong used-car loan products, acceptance of lower CIBIL scores in many cases.

6) Tata Capital

Interest: 10.00% – 12.00% p.a. Benefits: Attractive dealer offers, flexible repayment terms.

7) Kotak Mahindra Bank

Interest: 10.00% – 12.50% p.a. Benefits: Good digital onboarding and top-up options.

8) Bajaj Finserv (NBFC)

Interest: 10.50% – 14.00% p.a. Benefits: Quick processing, useful for instant approvals at dealerships.

9) Fullerton India

Interest: 10.50% – 14.50% p.a. Benefits: Focus on semi-urban customers and used car loans.

10) Lenders via aggregators (Pre-approved offers)

Multiple banks offer pre-approved, personalised rates to existing customers — check via lender app or aggregator for lowest priced pre-approved deals.

6. Car Loan Apply Process (Online + Offline)

Online Process

Visit bank/NBFC official website or trusted aggregator (BankBazaar, PaisaBazaar).
Enter basic details: name, mobile, PAN, city, estimated loan amount.
Compare offers, pre-qualify (soft credit check) and select lender.
Upload KYC & income documents, vehicle proforma invoice (for new car).
Sign loan agreement digitally (e-sign) and receive disbursal to dealer/buyer.

Offline Process

Visit bank branch or dealer-finance desk, submit application & documents, complete verification and sign agreements. Dealer-finance gives on-spot disbursal for showroom purchases.

Pro Tip: Pre-qualify first — it shows best rates you may get without harming your credit score.

7. Charges of Car Loan

Processing Fee: 0.35% – 2% of loan amount (min ₹499 – ₹2,499).
Prepayment Charges: Varies — NBFCs may charge 2–5% for full prepayment.
Late Payment Fee: Fixed + penal interest on overdue.
Foreclosure Charges: Banks often allow foreclosure without charges after a cooling period; NBFCs may charge.
Stamp Duty & Documentation: One-time legal/documentation fees may apply.

8. Benefits of Choosing the Right Car Loan

Lower EMI & Interest Outgo: Even 1% lower rate can save significant money over loan tenure.
Flexible Tenure: Choose tenure to balance EMI affordability and total interest paid.
Promotional Offers: Special low-rate promotions during festive seasons or on select models.
Balance Transfer: Move to a lower-rate lender mid-way to reduce costs.
Dealer Tie-ups: On-spot approvals and fast disbursal make buying easier.

9. Eligibility & Required Documents

Eligibility

Age: Typically 21–65 years (depends on lender).
Employment: Salaried or self-employed with minimum income threshold.
CIBIL Score: Preferably 650+ for best rates.
Residency: Indian resident with stable address & bank account.

Required Documents

Identity Proof: Aadhaar, Passport, Voter ID
Address Proof: Utility bill, Aadhaar
Income Proof: Salary slips (3 months) / ITR (2 years) / Bank statements
PAN Card
Vehicle Proforma Invoice (for new car) / Registration & PUC (for used car)

10. Useful Links

11. FAQs

A: Indicative rates range from ~9.5% p.a. (best banks for salaried) to 14%+ for NBFCs or riskier profiles. Final rate depends on CIBIL, income and loan-to-value (LTV).

A: Improve CIBIL score, provide higher down payment, choose shorter tenure, compare multiple lenders and use pre-approved offers from your bank.

A: Dealer finance may offer promotional low rates for short tenures; otherwise banks often provide lower long-term rates. Always compare total cost including processing fee.

A: Most banks allow prepayment/foreclosure; charges vary for NBFCs. Check lender terms — sometimes waiver after a minimum period.

A: KYC, address proof, income proof, vehicle RC, insurance, seller details and vehicle inspection report often required.

A: Yes — if you find a lender with lower interest, you can transfer outstanding loan; processing/foreclosure charges may apply from existing lender.

A: EMI = [P × r × (1+r)^n] / [(1+r)^n − 1], where P=principal, r=monthly interest rate, n=number of months. Use EMI calculators for quick estimate.

A: Generally car loan interest is not tax-deductible for personal vehicles. Exceptions exist for commercial vehicles used for business — consult a tax advisor.

A: Typically 10–25% for new cars. Higher down payment reduces loan amount and improves chances for lower rates.

A: Fixed gives predictability; floating may be lower currently but can change with market. For short tenures, fixed can be preferable; evaluate market outlook.

12. Conclusion

English: The best car loan in India 2025 depends on your profile — salaried borrowers with strong credit scores can access rates near 9.5% p.a. from top banks. Compare lenders, check total cost (interest + fees), negotiate processing charges, and consider balance transfer if rates fall. A smart choice today can save substantial money over the loan tenure.

हिंदी: 2025 में सबसे अच्छा कार लोन आपकी profile पर निर्भर करता है — यदि आपकी CIBIL अच्छी है तो आप 9.5% के आस-पास के दर पा सकते हैं। lender की तुलना करें, कुल लागत देखें और processing fee negotiate करें। सही निर्णय आपके लिए लंबी अवधि में बड़ी बचत ला सकता है।

Ready to compare? Check pre-approved offers from your bank or use trusted aggregators like BankBazaar or Paisabazaar.