Buying a car is a significant financial decision, and opting for the right loan can help reduce the overall cost of borrowing.
Several public- and private-sector banking institutions, as well as NBFCs, offer competitive interest rates and financing options. Therefore, a thorough comparison of applicable interest rates, EMIs, tenure options and processing charges is critical for borrowers before deciding on a car loan offer.
As of June 2026, car loan interest rates start from as low as 7.35% per annum. However, the final interest rate offered depends on factors such as the borrower’s , current debt levels, past loan servicing history, credit profile performance, current income, employer profile, and loan tenure.
Let us look at the comprehensive table of car loan rates and processing fees for June 2026, along with several important factors to consider before applying for a
Car loan interest rates in June 2026: Bank-wise comparison
|
Name of Banks/NBFCs |
Interest rate (%) p.a. |
EMI ( ₹) |
Processing fee |
|---|---|---|---|
| Union Bank of India | 7.50-10.00 | 10,019 – 10,684 | Up to ₹1,000 |
| Punjab National Bank | 7.60-10.70 | 10,043 – 10,797 | Up to 0.25% ( ₹1,000- ₹1,500) |
| Bank of Baroda | 7.60-11.35 | 10,043 – 10,959 | Up to ₹2,000 |
| Canara Bank | 7.45-11.45 | 10,007 – 10,984 | 50% waiver on 0.25% ( ₹1,000- ₹5,000) |
| Bank of India | 7.60-12.55 | 10,043 – 11,262 | Up to 0.25% ( ₹2,500- ₹10,000) |
| UCO Bank | 7.35-10.00 | 9,983 – 10,624 | 0.5% (Max. ₹5,000) |
| State Bank of India | 8.80-9.85 | 10,331 – 10,587 | ₹1,500- ₹4,000 |
| IDBI Bank | 7.75-9.30 | 10,078 – 10,452 | ₹2,500 |
| Bank of Maharashtra* | 7.45-11.75 | 10,007 – 11,059 | 0.25% ( ₹1,000- ₹15,000) |
| Indian Overseas Bank | 7.55-12.00 | 10,031 – 11,122 | Nil |
| ICICI Bank | 8.40 onwards | 10,234 onwards | Up to 2% |
| HDFC Bank | 8.15 onwards | 10,174 onwards | Up to 0.5% ( ₹3,500- ₹8,000) |
| Karnataka Bank | 8.12-11.62 | 10,167 – 11,026 | Up to 0.60% ( ₹2,500- ₹11,000) |
| Federal Bank | 7.65-9.00 | 10,055 onwards | 1% ( ₹1,000- ₹50,000) |
| Punjab & Sind Bank** | 7.50-14.00 | 10,019 – 11,634 | 0.25% ( ₹1,000- ₹15,000) |
| Indian Bank | 7.50-9.65 | 10,019 – 10,513 | ₹1,200 |
| IDFC FIRST Bank | 8.99 onwards | 10,377 onwards | Up to ₹10,000 |
| Central Bank of India | 7.60-9.30 | 10,043 – 10,452 | 0.50% ( ₹2,000- ₹20,000) |
Source: Paisabazaar.com
Note: EMI is based on a ₹5 lakh loan for 5 years. Rates as of 24 June. Bank of Maharashtra and Punjab & Sind Bank offer eligible concessions on interest rates and processing fees.
Five factors to consider before applying for a car loan
1. Compare the total borrowing cost: When you are taking a call on a car loan, you should look at these loans holistically, instead of just paying attention to the offered interest rates. Check , any hidden charges, documentation expenses and other similar associated costs.
2. Maintain a healthy credit score: A clean credit profile without any past defaults or missed payments, along with a solid credit score, preferably a score of more than 750, can cumulatively boost your chances of securing lower interest rates and favourable car loan terms
3. Select the right loan tenure: Strategically planning the car loan and its repayment tenure is an important aspect. You can use the to avail a car loan, where the borrower makes a 20% down payment, takes a 4-year loan and ensures that the total car EMI is less than 10% of the monthly income. Furthermore, remember, longer repayment periods reduce monthly EMIs but increase the total interest paid over the life of the loan.
4. Read the terms and conditions carefully: Check prepayment charges, foreclosure rules, expenses and restrictions (if any) along with applicable late payment penalties and other clauses before signing the car loan agreement.
5. Borrow within your repayment capacity: Don’t make emotional decisions. Don’t apply for a car loan that you know might be challenging for you to meet. Ensure the comfortably fit your monthly budget.
The most prudent car loan option for you from the above will depend on a host of factors, such as your current financial situation, repayment capacity and borrowing requirements.