Thinking of getting a new or second-hand car this year? One important thing that affects how much your loan will cost is the car loan interest rates. Even a slight change of 1% in the interest rate can significantly affect your monthly EMI and the overall repayment amount by thousands of rupees.
That’s why it’s crucial to understand how car loan interest rates work and what you can do to secure the best deal available in 2025.
🚘 What is a Car Loan Interest Rates?
A car loan interest rates is the extra charges a lender adds when you borrow money to buy a car. It determines the extra money you pay over and above the principal loan amount through your EMIs (Equated Monthly Installments). Car loan interest rates affects your monthly payment and the entire amount you will have to pay back.
In India, there are usually two types of car loan interest rates:
Fixed rate: The interest rates stays same for the entire loan period.
Floating rate: May increase or decrease over time based on the market.
Several factors affect the car loan interest rates you get, including your credit score, loan amount, loan tenure, and whether you’re purchasing a new or used vehicle. Understanding how these rates work helps you make a better decision and save money on your car loan. 🚗💰
Latest Car Loan Interest Rates from Top Banks (July 2025)
Here’s a snapshot of current Car loan interest rate of all Bank’s
| Bank/NBFC | Interest Rate (p.a.) | Loan Amount | Loan Tenure | Processing Fee |
|---|---|---|---|---|
| SBI | 9.05% – 15.25% | Min ₹1 lakh – Up to 90% of the on-road price of the car. | Up to 7 years | 1.25% of the loan amount plus GST. Maximum of Rs.10,000 |
| HDFC Bank |
8.15% – 13.75% | Min of ₹1 lakh – Max of ₹3 crore. | Ranging from 1 to 7 years | 0.5% of the loan amount, with a min of ₹3,500 and a max of ₹8,000. |
| ICICI Bank | 9.10% – 11.25% | Min ₹1 lakh – Max Up to ₹2 crore | Up to 7 years | Up to 2% of the loan amount + GST |
| Axis Bank | 9.40% – 15.80% | Min ₹1 lakh – Max of ₹1 crore. | 1 to 8 years | Between ₹3500 and ₹12000 |
| Kotak Mahindra | 7.70% – 9.75% | Min ₹75,000 – Max ₹2 Crores. | Up to 7 years | 0.5% of the loan amount |
| IDFC FIRST Bank |
9.60% –13.50% | Min ₹1 Lakh – Max ₹2 Crores. | Up to 10 years | Up to ₹10,000 |
| Bajaj Finance | 7.5% – 14% |
Min ₹1 Lakh – Up to ₹10 Crores. |
Up to 8 years | Up to 2.95% of the loan amount, inclusive of taxes. |
| Bank of Baroda |
8.75% – 11.50% | Min ₹10,000 – Up to ₹5 Crores. | Up to 7 years | ₹500 plus applicable GST |
| Punjab National Bank (PNB) |
7.30% – 9.60% | Min ₹1 lakh – Max ₹1 crore | Up to 7 years | 0.25% of the loan amount |
| Canara Bank | 7.70% – 10.30% | Min ₹1 Lakhs – Max ₹1 Crore+ | Up to 7 years | 0.25% of the loan amount (min ₹1,000 & max ₹5,000) |
| Union Bank of India | 7.30% – 10.40% | Up to ₹125 Lakhs | Up to 5 years | ₹1,000 + GST |
| Bank of India | 8.75% – 10.85% | Min ₹1 Lakhs – Max ₹2 Crore | Up to 7 years | 0.25% of the loan amount (min ₹1,000 & max ₹10,000) |
| Yes Bank |
9.7% – 12% | Min ₹1 Lakh – Max Loan Amount Up to ₹5 Crore. | Up to 7 years | 1% of the loan amount or ₹10,000 |
| Bandhan Bank | 9.47% – 12.15% | Min ₹1 lakh – Max ₹1.5 crore. | Up to 7 years | 4% of the loan amount. |
Note: Rates vary based on applicant profile and bank policies. Always check with the lender for the most accurate quote.
🔍 Want to Make Smarter Loan Choices?
Choosing the right car loan isn’t just about picking the lowest interest rate. It’s also about finding a loan that fits your budget, future goals, and financial comfort. Whether you’re buying your first car or upgrading to a new one, it’s important to understand how your loan will impact your monthly finances.
We’ve added some simple tools to help you plan.
👇 Use them to check your EMI and see if you can get a car loan:
| Car Loan Calculator | Check Loan Eligibility |
🏦 Types of Car Loans Available
When you apply for a car loan, you generally have two main options:
- New Car Loan: Offers lower car loan interest rates and longer repayment tenure (up to 7 years), making it easier to manage EMIs.
- Used Car Loan: Typically has higher interest rates, starting from around 11%, with shorter tenures (3–5 years), ideal for buyers on a budget.
Both options have their own advantages, so it’s important to evaluate your financial situation and choose the one that best fits your needs.
📊 How Do Banks Decide Your Car Loan Interest Rate?
Several factors influence the car loan interest rates offered by banks and NBFCs:
- CIBIL/Credit Score: A score of 750+ usually unlocks the best rates.
- Loan Tenure: A shorter loan period means you pay less interest overall.
- Loan Amount: Bigger loans might get you better interest rates.
- Income Level: A stable and higher income increases your chances of loan approval and better interest rates.
- Down Payment: A higher down payment reduces the risk for lenders, leading to better interest rates.
- Car Type & Brand: Some banks provide attractive rates on specific car brands or models.
💡 Smart Tips to Reduce Your Car Loan Interest Rate
Want to save money in the long run? Here are some proven strategies to get the lowest car loan interest rate:
✅ Compare loan offers from multiple banks and NBFCs before finalizing
✅ Apply for loans during festivals or special events to get discounts and no processing fees.
✅ Always pay your current loans on time to maintain a good credit score.
✅ If possible, go for a shorter loan term — it usually means less total interest.
✅ Make a bigger down payment to reduce how much you need to take as a loan.
✅ Use a reliable car loan EMI calculator to check how different interest rates affect your EMIs
📱 Don’t Forget to Use the EMI Calculator!
Before signing your loan documents, make sure to use our Car Loan EMI Calculator to:
- Estimate your monthly EMI payments 📅
- Know the total interest payable over the tenure 💰
- Understand the impact of different car loan interest rates and tenures on your monthly budget
This simple tool helps ensure your dream car remains a joy and not a financial burden.
❓ Frequently Asked Questions (FAQs)
Q1. What is considered a good car loan interest rates in India for 2025?
Ans: Good interest rates for new cars are usually between 7.5% and 9.5%, while used car loans often start at around 11%.
Q2. Can I negotiate the car loan interest rates?
Ans: Yes! Banks may offer better rates if you have a good credit score or an existing relationship with them.
Q3. Do NBFCs give lower car loan interest rates compared to banks?
Ans: Sometimes. NBFCs may be easier to qualify for, but they might charge higher interest rates or extra fees.Always compare carefully.
Q4. Does a higher credit score guarantee a lower interest rate?
Ans: A high credit score definitely improves your chances, but final rates depend on income, tenure, and lender policies.
Explore Our Loan Calculators & Interest Rate Guides
Want to understand your loans better? Explore our range of calculators and interest rate guides to manage your finances smartly:
| EMI Calculators | Interest Rate Guides |
|---|---|
| 🏠Home Loan EMI Calculator – Calculate your monthly EMIs based on loan amount, tenure, and interest rate. |
🏠Home Loan Interest Rates – Calculate your monthly EMIs based on loan amount, tenure, and interest rate. |
| 🏍️ Bike Loan Calculator – Estimate bike loan EMIs and tenure options. |
🏍️ Bike Loan Interest Rates – Get updated bike loan interest rates. |
| 💼 Personal Loan Calculator – Plan your personal loan repayments with ease. |
💰 Personal Loan Interest Rates – View current personal loan rates. |