• Car Loan Interest Rates 2020

    There are several lenders who offer car loans in India. The interest rates for the car loans in India start at as low as 7.25% p.a. Based on your credit rating, you can avail a car loan which finances up to 100% of the on-road price of the car.
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    Car Loan Interest Rate Comparison for All Banks

    Name of the Bank Interest Rate (p.a.)
    State Bank of India 8.00% onwards
    ICICI Bank 8.30% - 13%
    Indian Overseas Bank 7.95% onwards
    Jammu Kashmir Bank 8.35% onwards
    Canara Bank 7.30% onwards
    Indian Bank 8.45% onwards
    HDFC Bank 8.80% - 10.00% (Rack Interest)
    Syndicate Bank 8.75% onwards
    Karur Vysya Bank 9.00% onwards
    South Indian Bank 8.35% onwards
    IDBI Bank 9.20% onwards
    Yes Bank Contact the bank
    Karnataka Bank 8.68% onwards
    Federal Bank of India 8.90% onwards
    Corporation Bank 8.50% onwards
    Punjab and Sind Bank 7.50% onwards
    Tamilnad Mercantile Bank 9.90% onwards
    Punjab National Bank 7.40% onwards
    Union Bank of India 7.80% onwards
    Central Bank of India 7.25% onwards
    Lakshmi Vilas Bank 8.80% onwards
    United Bank of India 8.60% onwards

    Updated on - 14 Jul 2020

    Car Loan Interest Rate
    Car Loan Interest Rates

    Types of Car Loan Interest Rates - Fixed and Floating

    Car loan interest rates can be fixed or floating in nature. A fixed interest rate refers to a rate which remains constant throughout the loan tenure. Factors like market fluctuations do not affect fixed interest rates. On the other hand, a floating interest rate is a type of rate that keeps getting modified as per changing trends in the financial market.

    The differences between the two types of rates are explained in the table given below:

    Fixed interest rate Floating interest rate
    Interest rate is higher Interest rate is lower
    EMIs will remain constant EMIs will change according to MCLR changes
    Comes with lower risk Comes with higher risk
    Easy to prepare budgets with these rates Tough to maintain budgets as rates keep changing
    Offers security to borrowers Offers savings to borrowers
    Good for a short loan tenure (3 to 10 years) Good for a long loan tenure (20 to 30 years)
    • Fixed interest rates: When the financial market is not performing too well, borrowers generally look at fixed interest rates. You can ideally fix an interest rate for your auto loan as per your convenience. It is wise to go for a fixed interest rate if you feel that there may be an increase in the interest rates anytime soon or if you feel that the financial market may not go down lower than a particular level.
    • Floating interest rates: These rates are cheaper than fixed interest rates. Floating rates change according to changes in market trends. When the base rate or the MCLR changes, a floating interest rate gets affected. Hence, when the rate goes up, your car loan EMIs may increase and this can be a hassle for you. However, when the rate goes down, you can enjoy savings over a long period. The main drawback related to floating interest rates is that you cannot stick to your personal financial plans effectively as the rates can change from time to time.

    New Car Loan Interest Rates Comparison Offered by Top Lenders

    Name of the Lender Interest Rate (p.a.) Loan Amount Processing Fee
    Central Bank of India 7.25% onwards Up to Rs.75 lakh Rs.500 to Rs.20 lakh
    Union Bank of India 7.80% onwards Up to Rs.125 lakh 0.25% to 0.50% of the loan amount
    Indian Bank 8.45% onwards Up to 3 times of monthly income/salary 0.50% of loan amount Max: Rs.8696
    IDBI Bank 9.20% onwards Up to Rs.25 lakh -
    Axis Bank 9.05% onwards Rs.1 lakh onwards Rs.3,500 to Rs.5,500
    State Bank of India 8.00% onwards Up to 48 times of monthly income Rs.1,000 to Rs.1,500 + GST
    Jammu And Kashmir Bank 8.35% onwards Rs.50 lakh 0.5% of loan amount Min: Rs.1,500
    Canara Bank Car Loan 7.30% onwards Up to 90% of the car's value 0.25% of loan amount Min: Rs.1,000 Max: Rs.5,000
    Federal Bank Car Loan 8.90% onwards Up to 100% of the car's ex-showroom price Rs.1,500 to Rs.2,500
    Indian Bank Car Loan 8.45% onwards Up to Rs.200 lakh 0.23% of loan amount Max: Rs.10,236
    Bank of Baroda 8.65% onwards Up to Rs.100 lakh 0.5% of loan amount Max: Rs.10,000
    Bank of India Car Loan 7.35% onwards Rs.200 lakh 0.25% of loan amount

    Used Car Loan

      Lenders have different interest rates set for used car loans which depend on a lot of factors such as the age of the vehicle, loan tenure, etc. Get to know more about Pre-owned auto loans.

    • Credit Score – If you have a credit score of above 750, lenders are likely to offer you a car loan at a low interest rate. This is because a healthy credit score gives an indication to the lender that lending to you is less risky since you have been sincere about your past repayments as indicated by your score. So, if you want a lower interest rate on your car loan, it is a good idea to keep your credit score at healthy levels. Having a good credit score may also fetch you additional benefits such as quick approvals, pre-approved offers, etc.
    • Repayment Tenure - The repayment tenure you choose for your car loan will impact your interest rate. If you choose a longer tenure, your EMIs will be lower but you will be paying higher interest over the loan tenure. On the other hand, if you choose a shorter tenure, though the EMIs will be higher, you will be able to clear the loan sooner. Lenders will typically charge a lower interest rate on the car loan if you choose a shorter tenure simply for the fact that the loan will be cleared faster.
    • Loan Amount – The amount of car loan that you avail will affect the interest rate charged on your car loan. If you opt for a higher loan amount, you may get a lower interest rate and vice versa. This will, however, vary from lender to lender.
    • Relationship with the lender – Lenders with whom you have a good relationship, in terms of payments and other transactions, may offer car loans at lower interest rates. Hence, before you approach other lenders for car loans, ensure that you check the interest rates offered by your existing lender.
    • Income – If your income is on the higher side, you may enjoy the benefit of a lower interest rate as a higher income indicates higher repayment capacity.

    FAQS on Car Loan Interest Rates

    Can I negotiate with the lender for lower interest rates on my car loan?

    If you have a good credit score, higher income, and a good relationship with the bank, you can negotiate for a lower interest rate on car loans. However, this will solely lie at the discretion of the bank whether to honour the request or not.

    Will the interest rate on car loans be fixed or floating?

    Lenders offer both fixed and floating rates of interest on car loans. As the names suggest, fixed interest rates would mean that the interest rate will be fixed throughout the loan tenure, and floating interest rates would mean that the interest rate will vary based on different factors. Before you avail a car loan, check with the lenders what kind of interest rates they offer and pick the one that suits your requirements.

    I have a credit score of 700. Will it affect my car loan eligibility or the interest rates I pay on my car loan?

    When you apply for a car loan, the first thing that lenders look for is your credit score. Most lenders prefer lending to someone with a credit score above 750. With your score, it may be a bit difficult for you to get a car loan and if you do manage to get one, you may be charged a higher rate of interest.

    Will I get a lower interest rate if I make a higher down payment?

    If you make a higher down payment, you will need to avail a lesser amount as a car loan. In such cases, you may be able to get a lower interest rate since you will be repaying the loan quicker.

    Does any lender offer special interest rates on car loans for women borrowers?

    Yes. There are some lenders who offer a concession on car loan interest loans for women borrowers. One such bank is State Bank of India (SBI) which offers an interest rate that is lower than the one offered to other borrowers. Currently, the car loan interest rate is 9.60% for male borrowers while for women borrowers it is 9.55% for new cars. However, these special interest rates are only applicable to borrowers who are eligible for the Loyalty Car Loan Scheme.

    Does the type of car affect the car loan interest rate?

    The interest rate on a car loan is not directly affected by the type of car but may depend on the cost of the car. For example, luxury cars may have a lower interest rate as the amount of loan tends to be higher. Having said that, some lenders may charge a higher interest loan on higher loan amount availed.

    Will my car loan interest rate be lowered if I make a prepayment?

    Yes. If you make a prepayment, there are chances that the lender will offer you a lower interest rate because when you make a prepayment, the overall loan amount reduces. However, before you prepay your loan, understand the process completely as there may be some penalty that lenders will charge you. Also, whether you should make a prepayment or not will depend on factors such as the interest rate, stage of loan payment you are at, etc.

    How can I get a car loan with a lower interest rate?

    If you have a high credit score (above 750), make a higher down payment, choose a shorter repayment tenure, and have a steady source of income, you can negotiate with the lenders to offer you a lower interest rate on a car loan. Most lenders will be happy to acknowledge your request. However, before you negotiate with other lenders, make sure you check with your existing lender. As they are already aware of your transaction history, there are high chances of them acknowledging your request.

    Should I go for a fixed or floating rate of interest?

    If you choose a car loan with a fixed interest rate, the interest that you will be paying will remain unchanged throughout the loan tenure. However, if you go for a floating rate of interest, the interest that you will be paying may be higher or lower based on the increase or decrease in the interest rate. A fixed interest rate is recommended if you feel that there are chances of the interest rate increasing in the future and you do not want to take any risks.

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    Car Loan Interest Rate Reviews

    • Axis Bank Car Loan
      "Average"
      0.5 4.0/5 "Great!"
      Through showroom got suggestion to take a car loan from AXIS bank. I taken this loan on 3 years back. I got the loan amount of 4L with tenure period of 4 years. The rate of interest was okay. I done the down payment of around 1.5L. EMI need to pay of 10,500 rupees. The car model is Swift Dzire. I taken for commercial purpose based on amount which I get on monthly doing the EMI payment.
      Was this review helpful? 26
      , kolkata
      Reviewed on Mar 21, 2020
    • Kotak
      Kotak Car Loan
      "Good "
      0.5 4.0/5 "Great!"
      I have taken car loan directly through Kotak Mahindra Bank. The car is secondhand and the model was INNOVA 2015 and the loan is still active and paying the premium on EMI basis .The rate of interest and the processing fee was nominal and they given a good service.
      Was this review helpful? 18
      , tirupur
      Reviewed on Mar 20, 2020
    • HDFC Bank Car Loan
      "Good service"
      0.5 4.5/5 "Excellent!"
      I have taken car loan directly through HDFC bank.The car model was TATA Nixon and still this loan is active. The rate of interest and the processing fee are medium it was 10.99% and this loan was sanctioned immediately within 2 to 3 days got the loan. Everything was fine so far until this loan was sanctioned .
      Was this review helpful? 26
      , chennai
      Reviewed on Mar 19, 2020
    • HDFC Bank Car Loan
      "Easy loan approval"
      0.5 4.5/5 "Excellent!"
      I have chosen car loan from HDFC Bank on 3 years back. I made the down payment of Rs. 1.50L and the loan amount was Rs. 4.80L. The rate of interest was normal and i am paying EMI amount of Rs. 12,157 and i have purchased Swift BSI. I given my documents to the showroom itself without any difficulty.
      Was this review helpful? 18
      , jaipur
      Reviewed on Mar 18, 2020
    • review Car Loan
      "Best Service"
      0.5 4.0/5 "Great!"
      I have taken car loan through Tata Capital Ltd directly .The vehicle name is Hyundai Eon and this loan was sanctioned on proper time frame .This loan is still active and paid the premium on Emi basis.Customer service was good to me so far .The rate of interest and the processing fee was medium.
      Was this review helpful? 16
      , jaipur
      Reviewed on Mar 16, 2020
    • Tamilnad Mercantile Bank Car Loan
      "Average Service"
      0.5 2.0/5 "Expected more"
      I have taken car loan directly through Tamilnad Mercantile Bank.The rate of interest was very high, it was 14%.This loan was sanctioned on time without any delay .The car model was Maruti Suzuki Alto k10 vxi and there was no difficulties faced so far .This loan is still active and everything was good.
      Was this review helpful? 12
      , surat
      Reviewed on Mar 15, 2020
    • ICICI Bank Car Loan
      "Good"
      0.5 5.0/5 "Blown Away!"
      From ICICI Bank, i applied a car loan and the loan amount was Rs. 3.50L. I made a down payment of Rs. 90k and the rate of interest was normal. I have given my documents to the showroom and am planning to close the loan with in 2-3 months. I have purchased a Maruthi car.
      Was this review helpful? 17
      , chennai
      Reviewed on Mar 15, 2020
    • ICICI Bank Car Loan
      "Need to be zero for pre closure charge "
      0.5 3.0/5 "Satisfactory"
      I chosen ICICI car loan offer through showroom. I taken this loan on 2 years back for the amount of 8L which is sufficient with tenure period of 5 years. On that time rate of interest was lower when compared to other bank. The processing fee is less. The car model is TATA Nexon. I done the down payment of 2.8L. EMI need to pay of 17K. For pre closure is applicable with huge charge. So I didn't go for that option.
      Was this review helpful? 16
      , hyderabad
      Reviewed on Mar 11, 2020
    • Axis Bank Car Loan
      "Excellent service "
      0.5 5.0/5 "Blown Away!"
      My car loan journey started with Axis bank which was availed directly.The vehicle name is Maruti Ertiga and this loan is still active .The rate of interest and the processing fee was nominal .This loan was sanctioned on time without anydelay .I am paying the premium on EMI basis and there is no delay charges .
      Was this review helpful? 22
      , bangalore
      Reviewed on Mar 10, 2020
    • HDFC Bank Car Loan
      "Quick process"
      0.5 5.0/5 "Blown Away!"
      Maruti showroom suggested to take car loan from HDFC on few months back. They have sanctioned the loan within one week.The amount got 6L with tenure period of 7 years. An interest rate of 9%. I done down payment of 1L. EMI need to pay of 9637 rupees. The car model is Maruti new swift. Their service is good.
      Was this review helpful? 22
      , kanchipuram
      Reviewed on Mar 09, 2020
    • YES Bank Car Loan
      "Good Service"
      0.5 3.0/5 "Satisfactory"
      I have availed car loan through YES bank directly.still this loan is active .The car model was Hyundai Creta and the rate of interest was quite nominal it was 9.60%and processing fee was very high. This loan was sanctioned on faster basis ,the loan process was clearly shared by the agent . I am paying the premium on EMI basis which will be done on time.
      Was this review helpful? 13
      , agra
      Reviewed on Mar 06, 2020
    • ICICI Bank Car Loan
      "Excellent Service"
      0.5 5.0/5 "Blown Away!"
      I have taken car loan directly through ICICI bank .The rate of interest and the processing fee are pretty nominal and the car name is Maruti Suzuki Swift. I am paying the premium on EMI basis and need to pay the amount of 10,000.The loan was sanctioned on time without any drawbacks.
      Was this review helpful? 16
      , bangalore
      Reviewed on Mar 05, 2020
    • HDFC Bank Car Loan
      "Good Loan Service"
      0.5 4.0/5 "Great!"
      My car loan is going to be completed in this November. My salary goes into HDFC bank hence the guy keep on calling me to take the loan hence I have selected the car loan from same bank. In 2013, I have purchased the car loan by paying the down payment of Rs. 3.5L. Took the loan amount of Rs. 3.8L. I pay EMI amount of Rs. 6948 every month.
      Was this review helpful? 20
      , jammu
      Reviewed on Mar 05, 2020
    • ICICI Bank Car Loan
      "Good Loan Service"
      0.5 5.0/5 "Blown Away!"
      I chosen car loan from ICICI on 4 years back. I bought this loan because one of my friends was working as a bank manager. I made the down payment of Rs. 2.5L and I bought the loan amount of Rs. 4.5L. I have no idea about the interest rate. I was paying EMI amount of Rs. 7,000 when I purchase the card and it keeps on in ascending order just because of my increment amount I can close at early.
      Was this review helpful? 13
      , rajkot
      Reviewed on Mar 05, 2020
    • Kotak Car Loan
      "Less interest rate loan"
      0.5 5.0/5 "Blown Away!"
      My car loan was taken from Kotak Mahindra bank because an interest rate is less. I have taken the loan amount of Rs. 7L and I made the down payment of Rs. 5L. I have selected the duration of 5 years. I have been paying EMI amount of Rs. 14,000 per month. Documentation process was hassle free.
      Was this review helpful? 19
      , bangalore
      Reviewed on Mar 05, 2020
    • ICICI Bank Car Loan
      "Excellent Service"
      0.5 5.0/5 "Blown Away!"
      I have taken car loan through ICICI bank directly .The vehicle name is Hyundai Creta and this model was of 2018 this loan was a joint loan with my wife and still this loan is active ,premium on emi basis and there is no ppenalty for delay emi and the loan process was clearly shared by the agent .without any hassle got the loan .
      Was this review helpful? 19
      , ahmedabad
      Reviewed on Mar 05, 2020
    • HDFC Bank Car Loan
      "Fast approval loan"
      0.5 5.0/5 "Blown Away!"
      I have purchased my car loan with HDFC bank which i have taken in the month of December. There is no interest rate on fast approval so that reason i have availed this loan. I have taken the loan amount of Rs. 12.34 lakhs and i made the down payment of Rs. 50000. They have sanctioned my loan in 1 day.
      Was this review helpful? 29
      , vadodara
      Reviewed on Mar 05, 2020
    • Bank of India Car Loan
      "Good Service"
      0.5 4.0/5 "Great!"
      I have taken car loan directly through Bank Of India .The car model was 2018 and the name is Mahindra XUV and this loan is still active and paying the premium on EMI basis .The rate of interest and the processing fee was nominal .This was a joint loan with my father.
      Was this review helpful? 21
      , indore
      Reviewed on Mar 04, 2020
    • IndusInd Bank Car Loan
      "Best service "
      0.5 5.0/5 "Blown Away!"
      From INDUSIND Bank, i have taken a car loan and the loan amount was Rs. 4.50L and i made down payment Rs. 1.80L. Pre closure is there and the rate interest was normal , emi of Rs.9600 i am paying for the tenure of 5 years. Recently done a top up on this loan for personal use.
      Was this review helpful? 25
      , tirunelveli
      Reviewed on Mar 04, 2020
    • SBI Car Loan
      "Good loan offer"
      0.5 5.0/5 "Blown Away!"
      I got car loan offer from SBI which showroom suggested to apply. The rate of interest is 9.7% is fine. I taken this loan on 3.5 years back. The amount was sanctioned of 6L was sufficient with tenure period of 5 years. The car model Mahindra E2O. I have not any down payment. There are pre closure and part payment are applicable.
      Was this review helpful? 48
      , bangalore
      Reviewed on Mar 04, 2020
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