Buying a car with a loan allows borrowers to spread the purchase cost over several years. However, the total expense depends on more than the loan amount. Interest rates, monthly instalments and processing fees can all affect how much a borrower ultimately pays.
According to data compiled by Paisabazaar as of October 7, 2026, car loan interest rates across 18 lending institutions start at 7.35% per annum. UCO Bank has the lowest starting rate among the lenders listed, followed by Bank of Maharashtra and Canara Bank, both starting at 7.45%.
For a five-year car loan of ₹5 lakh, the estimated EMI at UCO Bank ranges from ₹9,983 to ₹10,624, depending on the applicable interest rate. At Bank of Maharashtra, the corresponding monthly instalment ranges from ₹10,007 to ₹11,059.
Car Loan Interest Rates and EMIs of 18 Banks
The following figures compare the interest rates, estimated EMIs for a ₹5 lakh loan over five years, and processing fees reported by Paisabazaar as of October 7, 2026.
| Bank/NBFC | Interest rate (p.a.) | Monthly EMI | Processing fee |
|---|---|---|---|
| Bank of Baroda | 7.60%–11.35% | ₹10,043–₹10,959 | Up to ₹2,000 |
| Bank of India | 7.60%–12.55% | ₹10,043–₹11,262 | Up to 0.25% |
| Bank of Maharashtra | 7.45%–11.75% | ₹10,007–₹11,059 | Up to 0.25% |
| Canara Bank | 7.45%–11.45% | ₹10,007–₹10,984 | 0.25% |
| Central Bank of India | 7.50%–9.30% | ₹10,019–₹10,452 | Nil till December 31, 2026 |
| Federal Bank | 7.90%–9.00% | ₹10,114 onwards | 1% |
| HDFC Bank | 8.25% onwards | ₹10,198 onwards | Up to 0.5% |
| ICICI Bank | 8.40% onwards | ₹10,234 onwards | Up to ₹8,500 |
| IDBI Bank | 7.75%–9.30% | ₹10,078–₹10,452 | ₹2,500 |
| IDFC FIRST Bank | 8.99% onwards | ₹10,377 onwards | Up to 5% |
| Indian Bank | 7.55%–9.65% | ₹10,031–₹10,513 | ₹1,200 |
| Indian Overseas Bank | 7.55%–12.00% | ₹10,031–₹11,122 | Nil |
| Karnataka Bank | 8.16%–11.66% | ₹10,177–₹11,037 | Up to 0.60% |
| Punjab and Sind Bank | 7.55%–14.05% | ₹10,031–₹11,647 | 0.25% |
| Punjab National Bank | 7.60%–10.70% | ₹10,043–₹10,797 | Up to 0.25% |
| State Bank of India | 8.30%–9.35% | ₹10,307–₹10,587 | ₹1,000–₹4,000 |
| UCO Bank | 7.35%–10.00% | ₹9,983–₹10,624 | 0.5%, maximum ₹5,000 |
| Union Bank of India | 7.50%–10.00% | ₹10,019–₹10,684 | Up to ₹1,000 |
Source: Paisabazaar, as of October 7, 2026. Rates and charges may vary, and applicable asterisks or conditions should be verified with the lender.
Which Banks Offer Lower Car Loan Rates?
UCO Bank has the lowest starting interest rate in the comparison at 7.35% per annum. Bank of Maharashtra and Canara Bank follow at 7.45%, while Central Bank of India starts at 7.50%.
However, the lowest advertised starting rate does not necessarily mean every applicant will qualify for it. The final rate may depend on the borrower’s credit profile, loan amount, repayment tenure and the lender’s eligibility requirements.
The interest rate ranges also differ considerably across banks. Punjab and Sind Bank has the widest range in the table, from 7.55% to 14.05%, while Bank of India lists rates between 7.60% and 12.55%.
Borrowers should therefore compare the actual rate offered to them rather than relying only on the minimum rate advertised by a bank.
Processing Fees and Special Offers to Consider
Processing fees are another important part of the total cost of a car loan. Although some lenders charge no processing fee under specified offers, others apply a fixed charge or calculate the fee as a percentage of the loan amount.
Central Bank of India and Indian Overseas Bank list nil processing fees under the conditions shown in the comparison. UCO Bank charges 0.5%, subject to a maximum of ₹5,000, while IDFC FIRST Bank lists a fee of up to 5%.
Certain lenders also offer concessions or waivers. Bank of Maharashtra provides an interest-rate concession of 0.25 percentage points to eligible existing customers who have maintained a relationship with the bank for at least six months. Canara Bank offers a 50% processing-fee waiver until December 31, 2026.
Borrowers should confirm the eligibility requirements and validity of these offers directly with the relevant bank before applying.
How to Choose the Right Car Loan
Before finalising a car loan, compare the interest rate, monthly EMI, total interest payable over the full tenure and processing charges. These figures together provide a clearer picture of the overall borrowing cost.
A loan with a lower advertised interest rate may not always be the cheapest option once fees and other applicable charges are included. Borrowers should also ensure that the monthly instalment fits comfortably within their budget.
Where the terms are unclear, seeking advice from a qualified financial adviser may help borrowers understand the available options and make an informed decision.
Disclaimer: This article is for general informational purposes only and does not constitute financial advice or a recommendation to choose any particular lender. Interest rates, EMIs, processing fees and promotional offers are indicative and may change according to lender policies and borrower eligibility. Verify the latest terms directly with the bank before applying for a car loan.
