Car loan interest rates in June 2026 start from as low as 7.35% per annum, according to reports from Mint. However, the final interest rate offered depends on multiple factors including the borrower's credit score, current debt levels, past loan servicing history, credit profile performance, current income, employer profile, and loan tenure. As reported by Mint, several public- and private-sector banking institutions, as well as NBFCs, offer competitive interest rates and financing options, making thorough comparison of applicable rates, EMIs, tenure options and processing charges critical for borrowers.
According to the comprehensive data from Paisabazaar.com as reported by Mint, UCO Bank offers the most competitive rates at 7.35-10.00% with EMI ranging from ₹9,983 to ₹10,624 for a ₹5 lakh loan over 5 years. Canara Bank follows with rates of 7.45-11.45% and processing fees of ₹1,000-₹5,000 with a 50% waiver on 0.25%. Bank of Maharashtra offers 7.45-11.75% with processing fees of ₹1,000-₹15,000. Among major banks, State Bank of India provides rates of 8.80-9.85% with processing fees of ₹1,500-₹4,000, while ICICI Bank offers 8.40 onwards with up to 2% processing fees. HDFC Bank provides rates from 8.15 onwards with processing fees up to ₹8,000.
As reported by Mint citing Paisabazaar.com data, processing fees vary significantly across banks. UCO Bank charges 0.5% (maximum ₹5,000) while Canara Bank offers a 50% waiver on 0.25% (₹1,000-₹5,000). Bank of Maharashtra provides 0.25% (₹1,000-₹15,000) and Indian Overseas Bank has nil processing fees. IDFC FIRST Bank charges up to ₹10,000 while Central Bank of India offers 0.50% (₹2,000-₹20,000). The rates are based on a ₹5 lakh loan for 5 years as of June 24, 2026.
According to Mint reports, borrowers should consider five key factors before applying for car loans. The first involves comparing total borrowing costs including processing fees, hidden charges, and documentation expenses beyond just the interest rate. Maintaining a healthy credit score with a score preferably above 750 can significantly boost chances of securing lower interest rates. The recommended 20/4/10 rule involves making a 20% down payment, taking a 4-year loan, and ensuring total car EMI is less than 10% of monthly income. Borrowers should carefully read terms and conditions including prepayment charges, foreclosure rules, and late payment penalties before signing agreements, and ensure EMI payments comfortably fit within their monthly budget.
