Car loan customers can currently find annual interest rates below 7.5%, with public sector banks offering some of the most competitive options. According to data compiled by Paisabazaar, UCO Bank leads with the lowest starting rate at 7.35% per annum, followed by Bank of Maharashtra and Canara Bank at 7.45%. Central Bank of India and Indian Bank offer loans from 7.50%, while rates vary based on factors including credit profile, income, loan amount, vehicle type, and lender-specific criteria. The rates and charges in the comparison are as of August 26, 2026.
The comparison reveals significant variations in EMI amounts for a ₹5 lakh loan over 5 years. As reported by Paisabazaar, UCO Bank offers the most affordable EMI at ₹9,983, while Punjab and Sind Bank charges the highest at ₹11,647. This represents a difference of ₹1,664 in monthly repayment. Over the complete 60-month tenure, the total EMI difference can reach close to ₹1 lakh. Among private banks, HDFC Bank starts at 8.15%, followed by ICICI Bank at 8.40% and IDFC FIRST Bank at 8.99%. State Bank of India offers rates starting at 8.70%.
Processing fees vary significantly across lenders, with some offering complete waivers and temporary concessions. According to the comparison data, Central Bank of India has no processing fees listed until December 31, 2026, while Indian Overseas Bank also has no processing fee. UCO Bank charges 0.5% of the loan amount, capped at ₹5,000. Canara Bank offers a 50% waiver on processing fees until September 30, 2026. Bank of Maharashtra provides a 0.25 percentage point interest concession for existing home loan borrowers and customers with at least six months of relationship with the bank. Federal Bank charges 1% of the loan amount with a cap of ₹50,000, while IDFC FIRST Bank has processing fees up to ₹10,000.
Borrowers should compare loans beyond just the advertised interest rate or EMI, as reported by Paisabazaar. Processing fees and total interest payable over the loan tenure are equally important factors. The comparison shows that Central Bank of India lists no processing fee until December 31, 2026, while Indian Overseas Bank also has no processing fee in the comparison. Before taking a car loan, borrowers should compare the final rate offered, processing charges, and total repayment amount across lenders. A shorter tenure may increase the EMI but can reduce the overall interest burden.
