Car loan rates have started at 7.35% among the lenders tracked by Paisabazaar.com as of September 16, 2026, with UCO Bank offering the lowest starting rate. According to the latest data, UCO Bank leads with 7.35%, followed by Canara Bank at 7.45% and Bank of Maharashtra at 7.45%. Punjab National Bank and Bank of Baroda have floating rates starting at 7.60%, while Bank of India starts at 7.60%. The rate comparison shows significant variations across lenders, with some banks offering separate floating and fixed-rate options that can impact monthly EMIs substantially. As reported by Mint, PSU banks are currently offering car loans to individuals at starting rates of less than 8%, though actual rates may vary based on borrower profiles, credit scores, and repayment history.
For a ₹5 lakh car loan over five years, the EMI ranges from ₹9,983 to ₹11,647 across different lending institutions, as per data compiled by Paisabazaar.com. For a ₹1 lakh car loan over seven years, the EMI starts at ₹1,531 at Canara Bank based on the latest BankBazaar data. As reported by BankBazaar, Union Bank of India follows with an EMI of ₹1,534 for the same loan amount and tenure. Indian Overseas Bank offers loans starting at 7.55%, translating into an EMI of ₹1,536 onwards. The EMI comparison highlights how rates vary significantly across lenders, with HDFC Bank starting at ₹1,569, ICICI Bank at ₹1,576, State Bank of India at ₹1,599, and Axis Bank at ₹1,606. Federal Bank shows an EMI of ₹1,622 despite having the same 7.60% rate, demonstrating how processing fees and other charges can impact the final EMI amount.
Processing fees vary considerably across lenders, with some offering waivers or concessions. According to the data from Paisabazaar.com, Central Bank of India and Indian Overseas Bank have listed nil processing fees, while UCO Bank charges 0.5% subject to a maximum of ₹5,000. HDFC Bank's processing fee is up to 0.5%, and Federal Bank charges 1% subject to its stated minimum and maximum limits. Some lenders are offering temporary concessions, with Bank of Maharashtra providing a 0.25 percentage point interest concession to certain existing customers, and Canara Bank offering a 50% waiver on its processing fee until September 30, 2026. The processing fee structure varies significantly across banks, with some offering complete waivers while others charge up to ₹10,000.
Several major banks now offer both fixed and floating interest rate options for car loans, providing borrowers with flexibility in their repayment planning. Punjab National Bank offers floating rates starting at 7.60% with fixed rates at 8.60%, resulting in EMIs of ₹1,539 and ₹1,589 respectively. Similarly, Bank of Baroda provides floating rates at 7.60% and fixed rates at 8.50%, generating EMIs of ₹1,539 and ₹1,584. IDBI Bank lists floating rates at 7.75% and fixed rates at 8.65%, with corresponding EMIs of ₹1,546 and ₹1,591. Jammu & Kashmir Bank offers rates linked to the RLLR, with floating options at RLLR + 0.75% and fixed at RLLR + 0.25%, though specific EMI figures are available upon contacting the bank directly.
As reported by BankBazaar, the starting rate shown in comparisons is not necessarily the rate every borrower will receive, as actual terms offered can vary depending on loan and borrower profile. The interest rate is not the only cost to check, as processing fees, loan tenure, and total interest payable can significantly impact the overall borrowing cost. A lender's lowest advertised rate may not be the rate offered to every borrower, as credit profile, income, relationship with the lender, vehicle and other eligibility factors can affect the final pricing. Before taking a car loan, borrowers should compare the final sanctioned interest rate, processing fee, total interest outgo, foreclosure or prepayment terms and any other applicable charges, as a slightly higher EMI may sometimes come with lower upfront charges, making the overall borrowing cost more relevant than the headline rate. The actual EMI will be higher for larger borrowing amounts, and borrowers should consider the loan tenure carefully as longer repayment periods may reduce monthly EMIs but increase total commitment. As emphasized by Mint, borrowers should compare the interest rate, processing fee, tenure, total interest payable, and prepayment terms rather than selecting a loan solely on the basis of the advertised starting rate.
