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Lowest Car Loan Interest Rates in India (2024)
Planning to buy a car? Check the latest car loan interest rates of all banks in India. Apply for a car loan with the lowest car loan interest rates.
Are you planning to buy a new car for yourself?
Buying a car is almost everyone's dream, and there is no doubt about this matter. From the regular Honda City to the luxurious Porsche, there are a plethora of options to choose from. Besides, automobile brands introduce new and upgraded models with state-of-the-art technologies, world-class features, and excellent performance every year. The more advanced the car model is, the higher the cost.
Everyone can't get their dream cars with their savings only. As the prices increase each year, many people either settle down with a car model within their affordability range but not up to their expectations or decide to take a car loan. Out of these two options, the second one sounds more feasible. But with credit, there is one single problem — car loan interest rates in India. In most cases, the rates are quite high, and when you want to repay the loan, you need to pay higher installments.
Keeping this in mind, we have introduced a list of car loan interest rates in India with lower values to get your dream car and have a world-class driving experience. This list will introduce you to car loan interest rates at all banks, ensuring you have a piece of complete knowledge about what these rates are and all other related aspects.
Bank
Interest rate (%)
Processing fee (INR)
Axis Bank
7.45-14.5
3500-5500
Bank of Baroda
7 onwards
1500
Bank of India
6.85 onwards
1000-5000
Canara Bank
7.30 onwards
1000-5000
HDFC Bank
7.95-8.30
3500-8000
ICICI
7.90 onwards
5500-8500
Central Bank of India
7.25-7.70
2000-20000
Bank of Maharashtra
6.40 onwards
NIL
IDBI Bank
7.50 onwards
3500-5500
Federal Bank
7.65 onwards
NIL
Before you decide on the bank from which you want to take the car loan, it is better to know more about the car loan interest rate calculator. This will help you decide whether you can afford the EMIs for the concerned bank loan. This section below describes how you can calculate the EMI for the car loan you want from a specific bank.
The best way to calculate EMI based on the car loan interest rate is to use an online calculator. You can find several calculators offered in the hands of different banks. Once you enter the site, you will come across the calculator inputs. Here, you need to give values for the loan amount you want to take, the concerning car loan interest rate, and the total tenure you want to pay the EMIs. The monthly installments will be displayed once you click on the calculate button.
The values will change based on the interest rate and the total repayment time you have opted for. The online calculator is super easy, so you can get the EMIs to pay for all bank car loan interest rates. This way, you will be able to compare whether you will be able to pay the EMI for a concerned bank.
Often, the calculator tools for car loan EMIs can show discrepancies. So, to double check the amount, you can take help from the EMI calculator formula. This will help you to process the calculation manually and check if both values are aligned with each other or not.
The formula for the EMI for a car loan is as follows:
[P x R x (1+R)^N]/[(1+R)^N-1]
Here, the variables indicate:
P is the principal car loan amount that you need from the bank
R is the current car loan interest rate offered by the concerning bank
N is the total number of years for which you need to pay the loan amount
This EMI is divided into parts- the principal amount and the interest amount. To decrease the payable amount per month, you must choose the lowest car loan interest rate in India. This will help you save a lot of money with ease.
Two types of loan interest rates are levied on car loans. Both these rates function differently and come with both advantages and disadvantages. This is why knowing about these rates is more beneficial, as you can decide which car loan interest rate in India to choose.
You can also know if the chosen interest rate type will be profitable for you or not. Therefore, deciding between the bank and the loan won't be a problem. In the below section, we have described the two main interest rate types levied on car loans according to most banks.
From the name itself, you can understand that India's fixed car loan interest rate will have a particular value applicable throughout the loan repayment tenure. This value won't change till you pay the last EMI instalment. Then, every month, the interest will apply to the remaining debt amount, and the EMI will be calculated accordingly. Most banks offer a fixed type of interest rate on car loans.
The fixed interest rate won’t suffer from any impact caused due to market instability, inflation or deflation, price movements, and the global stock market.
The EMI will be fixed throughout the tenure. Therefore, you can easily plan the monthly budget accordingly, as the interest amount won’t change throughout.
Thanks to the fixed interest rates of EMIs, your credit score will remain high since it will become easier for you to pay off the debts before the due date.
One of the major drawbacks of the fixed car loan interest rate is the higher valuation compared to the Flexi or floating rates. This is why the interest amount you have to pay per month is quite high.
If the interest rate decreases in the middle of your tenure, your loan won't be subjected to this benefit. It means that the EMIs for the upcoming months will be calculated on the previous rates only and not the new ones.
You won’t be able to change the interest rates in between or get flexibility on extending the repayment period.
The interest rate of the floating car loan interest rate depends on a base value or the index. This indicator is dependent on market conditions. For example, if there is sudden inflation, the index will increase. As a result, the floating interest rate will also increase, and you need to pay more for the coming monthly payment against the car loan you have opted for.
Similarly, if more funds are released into the global liquidity pool of the stock market, the index will decrease. As a result, it will further reduce the overall floating interest rate, and you can finally decrease monthly payments.
One of the main advantages of choosing the floating car loan interest rate for all banks is its lower value than the fixed rate. As a result, you will be able to save more with this particular rate type levied on the lending amount.
Whether the floating rate has increased or decreased, its value always remains lower than the fixed rate.
Sometimes, the inflation can be too high, causing the floating interest rate to increase more than the expected amount. But this will be temporary.
The changes in your monthly interest charged will depend on the market. Therefore, the lender will always apply the current car loan interest rate based on the market valuation.
With the floating interest rate, there is no way you will get a fixed amount on the total amount to be paid each month throughout the loan tenure.
Due to the uneven monthly payments, drawing a proper budget plan is extremely difficult. Therefore, there are higher chances of not being able to pay an EMI for a certain month.
Late payments are charged with a higher compensation rate because the amount to be paid doesn’t remain the same throughout the tenure.
Due to the higher risks of being unable to pay the installments on time, your CIBIL score will take a hit. As a result, you may have to face a lot of hassles later on when you want to take another loan.
Thanks to the availability of many financers, national banking institutions, and non-government financing organizations, you can easily take a loan to buy your dream car. However, choosing the lowest car loan interest rate in India is not an easy task. There are so many things you need to consider before you conclude. As you might be new to this car loan thing, we have listed some of India's top ten lowest interest rates.
Axis bank is one of the best loan lenders in India. Thanks to the new and revamped policies offered by the financer, you will get a lot of flexibility with the loans. First, the interest rate varies from 7.45% to 14.5% based on the CIBIL score, the loan amount, and several other factors. If you want the loan for an on-road car price, Axis bank will give you 100% of the calculated amount. If you are a customer of Privee banking, Priority banking, or Wealth Banking, you will get special offers. Apart from this, salaried account holders and customers opting for pre-approved loans don't have to submit their income tax reports or banking statements.
Minimum loan amount: 1 lakh
Minimum repayment tenure: 8 years
Processing fee: INR 3500 to INR 5500
Penalty interest: 2% on per month EMI
Foreclosure charges: 5% of the principal
With one of India's best values for the lowest car loan interest rate, the Bank of Baroda is a popular financer. You can get approximately 90% of the total finance with minimal documentation. One of the best things is the zero foreclosure amount which will help you pay off the entire loan without any additional charges. Apart from this, the funds will be disbursed earlier than expected.
Minimum loan amount: 2 lakh
Maximum repayment tenure: 84 months
Processing fee: INR 1500
Penalty interest: 0.05% on per month EMI
Foreclosure charges: 0% of the principal
If you are looking for the lowest car loan interest rate in India, the Bank of India is one of the best financiers in the Indian market. The minimum interest rate starts from 6.85% and goes up to 9.45% based on the loan features and the principal amount. You can apply for 85% of the total on-road price of the car as the principal loan amount. The documents required for getting the loan approved are minimal, ensuring you don't face any hassles. Bank of India offers car loans for both new and pre-owned cars with a nominal car loan interest rate in India.
Minimum loan amount: 5 lakh
Minimum repayment tenure: 7 years
Processing fee: INR 1000 to INR 5000
Penalty interest: 2% on per month EMI
Foreclosure charges: 5% of the principal
With a 7.30% current car loan interest rate, Canara Bank offers outstanding opportunities to customers aiming to get credit for both new and pre-owned cars. Moreover, depending on its valuation, the financer offers 80% to 90% of the on-road price of all cars. Therefore, you won't have to worry about arranging maximum finance for the down payment. However, your CIBIL score needs at least 750 and more, which is why you should check the score before applying.
Minimum loan amount: 10 lakh
Maximum repayment tenure: 84 months
Processing fee: INR 1000 to INR 50 00
Penalty interest: nominal amount
Foreclosure charges: 0% of the principal
HDFC offers you the lowest car loan interest rate in India, with a 7.95% to 8.30% valuation. The exact rate will depend on your car valuations, CIBIL score, and employment status. If you are a salaried employee, you will get the maximum benefits compared to a self-employed individual. You can easily apply for a loan through digital mode without going to the bank in person. You won't have to submit any documentation in this mode, and the loan will be approved almost instantly. One of the best things is that you will easily get 100% of the total car finance. The maximum loan amount you can apply for is INR 3 crores. You can also get a top-up loan even when the previous car loan is active.
Minimum loan amount: 1 lakh
Minimum repayment tenure: 1 year
Processing fee: INR 3500 to INR 8000
Penalty interest: 2% on per month EMI
Foreclosure charges: 0% of the principal
Suppose you compare the values of all bank car loan interest rates. In that case, ICICI bank offers maximum flexibility and a nominal rate that falls within the affordability rate of most applicants. With a 7.35% interest rate, you can apply for loans for both new and pre-owned cars for most brands without any hassle. Moreover, you will get up to 100% of the on-road car price, ensuring you can get relief from the down payment charges.
Minimum loan amount: 1 lakh
Minimum repayment tenure: 39 months
Processing fee: INR 5500 to INR 8500
Penalty interest: 2% on per month EMI
Foreclosure charges: 0% of the principal
With a car loan interest rate of 7.25% to 7.7%, the Central Bank of India is one of the best options to avail of the credit amount at a much lower value. The financer has issued separate rules for salaried and self-employed individuals. You can even opt for loans for new and used cars with ease, ensuring nothing can interfere with your goal of getting a new car. The allowable CIBIL score required to get the Central Bank of India loan is between 725 and 760.
Minimum loan amount: 3 lakh
Maximum repayment tenure: 84 months
Processing fee: INR 2000 to INR 20000
Penalty interest: 2% on per month EMI
Foreclosure charges: 0% of the principal
With the lowest car loan interest rate of all banks, the Bank of Maharashtra offers many application opportunities. The minimum chargeable interest rate is 6.40%, which is quite nominal, ensuring you won't have to pay a lot for monthly EMIs once the loan gets approved and the repayment cycle starts. The maximum funding offered here is about 90% of the total on-road price of the car.
Minimum loan amount: 1 lakh
Maximum repayment tenure: 84 months
Processing fee: Doesn’t charge any processing fee
Penalty interest: 2% on per month EMI
Foreclosure charges: 0% of the principal
IDBI Bank offers a current car loan interest rate of 7.40% to ensure you can get the best valuation without further concern. Moreover, the financer offers maximum funding for the car's on-road price, which is why you won't have to worry about arranging the down payment. Apart from this, you can get loans on different cars easily without any further problems.
Minimum loan amount: 1 lakh
Minimum repayment tenure: 8 years
Processing fee: INR 3500 to INR 5500
Penalty interest: 2% on per month EMI
Foreclosure charges: 1% of the principal for 6 months of the loan start date
Offering maximum funding of 100% of the on-road car price, the Federal Bank of India is one of the best financers from where you can opt for a car loan. The current car loan interest rate starts from 7.65%, ensuring you don't have to pay as much as the EMIs. Furthermore, you don't have to pay any processing charges for the loan, which is an added advantage. The processing of the loan amount is quite fast, ensuring you can get the loan approved within days. Apart from this, you don't have to submit any document concerning your income which is ideal for many people.
Minimum loan amount: 1 lakh
Maximum repayment tenure: 84 months
Processing fee: Doesn’t charge any processing fee
Penalty interest: 2% on per month EMI
Foreclosure charges: 5% of the principal
Check the credit score because all banks have a fixed CIBIL score limit. Your loan application will get canceled if you fail to achieve that limit.
You should always check the affordability rate. Not all banks offer the same minimum amount and tenure. This is why your affordability rate won’t be the same.
Check different lenders because their flexibility, offerings, and other aspects vary greatly. This will help you decide if the chosen lender is feasible for you or not.
You can also add a cosigner to meet the credit score criteria. However, the person needs to have a better credit score.
It is best to make more down payment so that your on-road price of the car approved for a loan can be less. This will reduce your monthly EMI and also the interest amount.
If you have the provision to pay the total amount earlier, go for it.
Eligibility criteria play a crucial role in determining the total interest rate that will be levied on the loan.
A higher credit score means lower interest rates because the risk factor will be lesser.
You will have to pay more interest if the repayment term is more.
Salaried employees need to pay less interest. But, on the other hand, self-employed individuals always have higher interests.
If you choose a fixed interest, the payment will be more than the floating interest.
The best car loan interest rate in India is between 6.40% to 9%, as the interest levied will be of a nominal rate.
The EMI for a car worth INR 10 lakhs will depend on the principal loan amount, the car loan interest rate in India, and the tenure for repayment.
A 3.5% car loan interest rate is good for the applicants.
The best APR for a car in India will be approximately 7%.
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