Car Loan in India 2025

Car Loan - A car loan is a financial agreement that allows you to borrow money to purchase a vehicle, which you repay over time with interest.

In India, car loans come with low interest rates and can be repaid over up to 8 years. Some lenders may offer loans covering up to 100% of the car’s on-road price.

Updated On - 05 Sep 2025
Animated CTA

You can compare the car loan interest rates offered by various lenders to choose the best option. Lenders offer car loans at low-interest rates if your credit score is high.

Compare Car Loans in India 2025

Here's a comparison of some of the best car loan schemes available in 2025, highlighting the starting interest rates  and tenure:

Name of the Bank

Interest Rate (p.a.)

Tenure

State Bank of India

8.90% p.a. onwards

Up to 7 years

Indian Overseas Bank

7.80% p.a. onwards

Up to 7 years

IDFC First Bank

9.99% p.a. onwards

Up to 10 years

Jammu and Kashmir Bank

  1. RLLR + 0.75% p.a. onwards (floating)
  2. RLLR + 0.25% p.a. onwards (fixed)

Up to 7 years

Canara Bank

8.05% p.a. onwards

Up to 7 years

HDFC Bank 

9.40% p.a. onwards (Rack Interest)

Up to 7 years

IndusInd Bank

8.00% p.a. onwards

Up to 5 years

ICICI Bank

9.15% p.a. onwards

Up to 7 years

Karur Vysya Bank

8.55% p.a. onwards

Up to 7 years

South Indian Bank

8.75% p.a. onwards

Up to 7 years

Kotak Mahindra Bank

Contact the bank

Up to 7 years

IDBI Bank

  1. 8.30% p.a. onwards (floating)
  1. 8.90% p.a. onwards (fixed) 

Up to 7 years

Yes Bank

Contact the bank

Up to 8 years

Karnataka Bank

9.05% p.a. onwards

Up to 7 years

Federal Bank of India

10.50% p.a. onwards

Up to 7 years

Equitas Small Finance Bank

9.00% p.a. onwards

Up to 7 years

Punjab National Bank

  1. Floating: 7.85% p.a. onwards 
  1. Fixed: 8.85% p.a. onwards 

Up to 7 years

Union Bank of India

7.80% p.a. onwards

Up to 7 years

Axis Bank

8.80% p.a. onwards

Up to 7 years

Bank of Baroda

  1. Fixed: 8.65% p.a. onwards
  1. Floating: 8.15% p.a. onwards

Up to 7 years

Tamilnad Mercantile Bank

9.75% p.a. onwards

Up to 7 years

Bank of India

7.85% p.a. onwards

Up to 7 years

Bank of Maharashtra

7.70% p.a. onwards

Up to 7 years

Central Bank of India

7.85% p.a. onwards

Up to 7 years

Indian Bank

7.75% p.a. onwards

Up to 7 years

UCO Bank

7.60% p.a. onwards

Up to 7 years

Bandhan Bank

9.47% p.a. onwards

Up to 7 years

Note: Interest rates will differ from one bank to another. This makes it critical to compare interest rates before choosing a best auto loan to apply for.

Car Loan in India 2025

Types of Car Loans

The different types of car loans are mentioned below:

  1. New Car Loan: New car loans can be used to purchase a brand-new car straight out of the showroom. Depending on the bank, the interest rates will vary. Up to 100% of the on-road price of the car may be provided as a loan.
  2. Used Car Loan: Lenders offer used car loans up to 80-85% of the price of the car at attractive interest rates for a loan tenure up to 5 years. However, certain lenders will offer loans for cars that have been purchased within the last 5 years.
  1. Loan against Car: When one is in dire need of funds, he or she can pledge his or her old car as collateral in order to obtain sufficient funds to purchase a new car. This is known as Loan against Car. If you have a bad credit score, you can pledge your old car to the bank as collateral to obtain some much-needed funds.

Car Loan Tips: Save Money and Get Approved Faster

It is vital that you maintain a good credit score when applying for an auto loan. Apart from the loan getting approved quicker, lenders will offer low interest rates if your credit score is good.

No security or collateral is required when availing a car loans. The car acts as the security.

Key Components of a Car Loan

The main components of a car loan are as follows:

  1. Monthly Instalments: The EMI that must be paid every month. EMI consists of interest and principal amount.  
  2. Down Payment: The upfront amount paid when you purchase the car.  
  3. Loan Term: The tenure or duration of the loan. EMIs must be paid for the selected tenure.  
  4. Rate of Interest: The interest rate charged by the lender on the Vehicle loan that has been availed.
  5. Principal Amount: The amount that is borrowed to buy the car. The principal amount does not include any fees or interest levied by the bank.

How to Apply for a Car Loan

Online

Most lenders provide the option to apply for a car loan online and the process is mentioned below:

  1. You will need to visit the official website of the lender to apply for a loan.
  1. Select ‘Apply Now’ under the car loan section.
  1. Enter the relevant details.
  1. The documents can be uploaded.
  1. A customer service representative will call you to process the request.

You can visit the bank branch and apply for a car loan. The relevant documents must be submitted. Once the verification process is completed, the loan will be provided.

Offline

You can visit the bank branch and apply for a car loan. The relevant documents must be submitted. Once the verification process is completed, the loan will be provided.

Eligibility Criteria to Avail a Car Loan

The car loan eligibility criteria can be different for different banks. The common criteria are as follows:

  1. The Age of the individual must be between 18 years and 75 years.
  2. Minimum net monthly income of Rs. 20,000.
  3. At least one year of employment with the current employer.
  4. Must be salaried or self-employed, working for a government establishment or a private company.

Documents Required to Avail a Car Loan

To prove your eligibility, you'll need to provide certain documents. Though this too is specific to different lenders, the common documents will be:

Requirements

Individuals

Identity proof (any of the following)

Aadhaar, Passport, Driving license, Voters ID card, PAN card

Address proof (any of the following)

Aadhaar, Passport, Driving license, Ration card, Utility bills

Proof of income

Form 16, Salary slips,  if you are salaried, Latest Income Tax Returns, Bank statements going back 6 months

Note: Make sure you check exactly what documents the lender wants. The documents required can change depending on your situation too. The documents required to take a used car loan are the same as above.

Checklist to Follow While Applying for a Car Loan

Steps

Requirement

Inference

Application

Compare all offers available

To find the loan that offers you the highest loan amount and the most affordable interest rate

Submit Income Proof

Bank Statement (last 6 months) Pay-Slips (last 3 months) IT- Returns (last 2 years)

Lender wants to establish your ability to repay the loan

Submit Proof of Address and Identity

PAN Card, Voter's ID, Aadhaar Card, Passport, etc.

Lender wants to establish your nationality, identity, and permanent address

Credit History

PAN Card

Lender wants to check your past credit records and establish if you can be trusted to make regular repayments

Information About Vehicle

Sales Receipts from the showroom from where the vehicle was purchased

Lender must confirm that the deal was affected as intended

Proof of Insurance and Driving License

Copies of the vehicle's Motor Insurance and your Driving License

Lender must establish that all laws and protocols are followed with regard to the purchased vehicle.

Car Loan EMI Calculator

In case you wish to avail a car loan to purchase a four-wheeler, you can use BankBazaar’s car loan EMI calculator to check the monthly payments. The calculator is easy to use and only basic details such as the loan amount, processing fee, tenure, and interest rate must be entered. Once the details have been entered, results are displayed immediately, hence, saving time.

Some of the main advantages of using BankBazaar’s car loan EMI calculator are mentioned below:

  1. A complete break-up of the amount that needs to be paid will be provided.
  2. Your budget can be planned as you will know the EMIs.
  3. Accurate results are provided.
  4. Helps in saving time as results are displayed immediately.

How to Calculate Car Loan EMI?

The Equated Monthly Installments (EMIs) that you will pay will depend on a few key factors.

The EMI for any type of loan is essentially calculated using a formula. The formula is as follows:

E = P x R x (1+R)^n / {(1+R)^n – 1}

where ‘E’ stands for the EMI you owe,

‘P’ stands for the principal amount,

‘R’ stands for the interest rate applicable to your car loan,

and ‘n’ stands for the tenure of the car loan (in months).

  1. The loan amount.
  2. The interest rate that is applicable to the loan.
  3. The tenure of the loan.
  4. The processing fees.

The higher the loan amount, the higher your EMI will be. Similarly, the shorter the loan tenure the higher the EMI. To find the best compromise between an affordable EMI and duration you should check out our car loan EMI calculator.

Choosing the Right Car Loan

  1. Compare: BankBazaar.com can help you compare the various vehicle loan options available to you.
  2. Interest Rate: Choose a loan that offers you the best interest rate along with the loan amount you need.
  3. Keep it Simple: Choose the car before applying for the loan and make sure the cost of the car fits your budget.
  4. Hidden Fees and Charges: Sometimes what appears obvious will have a hidden component. It is important to check for any hidden fees and charges.
  5. Special offers: There could be special offers available when you are applying for your loan. Make sure you take advantage of them.
  6. Insurance: Check the insurance premium for the car as this is a recurring cost.

Features & Benefits of Car Loans

When it comes to car loans in India, in general, the following features and benefits are offered. Note that the following is a generalised look at the advantages offered by car loans. Individually, lenders may have highly customized and specialized offers for their customer base.

  1. Car loans in India help you purchase a car even if you don’t have the full amount upfront. 
  1. Most lenders finance the entire on-road price, often with no down payment required. 
  1. Some banks offer loans in crores, giving you wide freedom to choose your car. 
  1. Car loans are usually secured loans, with the car serving as collateral. 
  1. Procuring a car loan is simpler compared to other loans, and even those with lower credit scores may qualify (varies by lender). 
  1. Many loans offer fixed interest rates, ensuring predictable monthly payments. 
  1. Interest rates are often based on your credit score - higher scores can get you cheaper loans. 
  1. Car loans are available for both new and used cars.

FAQs on Car Loan

  • How much car loan can I get based on my salary?

    Most lenders offer up to 80–100% of the car’s on-road price. Loan amount depends on your monthly income, existing EMIs, and credit score.

  • Can I get a car loan with a low credit score?

    Yes, some lenders offer car loans even with low credit scores, but the interest rate might be higher. A larger down payment can help improve approval chances.

  • Will my car be hypothecated if I take a car loan?

    Yes, the car will be hypothecated to the lender until the loan is fully repaid. Once closed, the hypothecation can be removed from the RC.

  • What car models are financed by the standard car loan in India?

    Unless otherwise specified, almost all small to medium sized cars, Commercial Vehicle Loan, Sports Utility Vehicles (SUV), and Multi Utility Vehicles (MUV) come under the purview of car loans available in India. 

  • What happens if I miss a car loan EMI?

    Missing an EMI may lead to penalty charges, affect your credit score, and eventually lead to car repossession if multiple EMIs are missed.

  • Can I get 100% funding to buy a car?

    Yes, certain lenders offer 100% of the on-road price of the car as a loan.

  • Will I get a lower car loan rate if I have a high credit score?

    Yes, a good credit score (750 and above) usually qualifies you for lower interest rates and better loan offers.

  • Can I transfer my car loan to another bank for better rates?

    Yes, many lenders offer balance transfer options. You can shift your loan to another bank offering lower interest and better terms.

  • When applying for the car loan, do I need a guarantor / security?

    Most lenders in India will not insist upon any guarantors; however, if your annual income does not match up to the expected requirement, then you may be expected to sign-up as a co-applicant and/or guarantor

  • What are the commonly available car loan repayment tenures?

    Repayment tenures usually range from 12 months to 84 months (1-7 years).

  • Can I pre-pay the entire loan amount? What are the conditions involved?

    Yes, you can prepay the entire car loan and save on vital interest payments in the future. However, most banks will allow the pre-payment option after you have chalked off 6 months on your loan tenure.

  • What kind of a credit score do you need to buy a car?

    Just like with most loans, a high credit score above 750 is ideal. But you can still apply for a loan if your credit score is above 600.

  • Will my credit score affect the interest rate?

    Yes. some banks will offer lower interest rates to applicants with high credit scores.

  • What is the minimum credit score I need to get a car loan?

    Most banks and lenders prefer a minimum credit score of 700 for car loan approval. However, some institutions may approve loans for scores as low as 650, though this could result in higher interest rates or require a larger down payment. A score of 750 or above is ideal for better rates and quicker approvals.  

  • Should I take a car loan from the car dealership or bank?

    Before you apply for any car loan, ensure that you explore all the options available. Once you explore, you will get an idea about the benefits offered by various lenders on their car loans. Compare the benefits offered and pick a lender that fits your requirements. Whether it is a bank or a car dealership, pick the one that offers better interest rates.

  • Do banks offer finance for used cars?

    Yes, many top lenders such as SBI, HDFC Bank, etc., offer loans to buy used cars.

  • How much down payment do I need to make to buy a car?

    Making a higher down payment will mean that you will need to avail a lower loan amount to buy a car. When you avail a lower loan amount, there are chances that banks or lenders may offer you a car loan at lower interest rates.

  • What will lenders look for when I apply for a car loan?

    One of the most important factors that lenders consider before offering you a car loan is your credit score, The other factors that lenders look for when you apply for a car loan are your employment status, residence and job stability, income, debt-to-income ratio, etc.

  • What is the lowest EMI that I need to pay for a car loan?

    The amount of EMI (equated monthly instalments) that you will be paying towards your car loan will depend on the interest rate, loan amount, and the repayment tenure you choose. You can calculate the EMI by using the EMI Calculator tool available on the BankBazaar website.

Latest Car Loan News and Updates

HDFC Bank Securitizes Rs. 12,700 Crore in New Car Loans

HDFC Bank, India's largest private sector lender, has securitised new car loans worth over Rs. 12,700 crore by issuing Pass-through Certificates (PTCs). The move is expected to boost the bank's liquidity. According to a late-night statement from India Ratings, the pool of loans originated by HDFC Bank will be assigned to a trust. The rating agency has given these PTCs an 'AAA/stable' rating, with maturities ranging between two and six years. The securitisation pool comprises 0.18 million loans with an aggregate outstanding principal of Rs. 12,371.8 crore as of 31 October 2024. The loans, all classified as standard assets, have a weighted average Internal Rate of Return (IRR) of 8.91% and a robust repayment history. Approximately 42.7% of the loans in the pool are from the top three states. As of September 2024, HDFC Bank reported gross advances of Rs. 25.19 trillion, with auto loan assets under management, including new car loans, amounting to Rs. 1.3 trillion.

7 January 2025

Three New Cars to Be Launched by Tata

Tata Motors is set to launch three new cars. Among them will be an electric car. The electric car that will be launched by Tata is the Curvv. The other two cars that will be launched by the company are the Altroz Racer and the Nexon CNG. The Nexon CNG will be powered by a 1.2-litre engine, while the Altroz Racer will be powered by a 1.2-litre turbo petrol engine. The first car that will be launched will be the Tata Curvv.

20 May 2024
Disclaimer
Display of any trademarks, tradenames, logos and other subject matters of intellectual property belong to their respective intellectual property owners. Display of such IP along with the related product information does not imply BankBazaar's partnership with the owner of the Intellectual Property or issuer/manufacturer of such products.