I did research on major Indian banks to find the best bank for car loan in India. You can go through the list of the banks and the car loan interest rate comparison table for the best car loan in India.
In the last of the article, I have listed all the factors which affect the car loan interest rate and what things you should consider while taking a car loan.
PRO TIP – Other things being equal, a good way to benchmark the cost of car loans is EMI. Compare EMIs across loan products for the same tenure and loan amount.
Plan to buy a car in the festival season to avail lucrative festival offers
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Best Car Loan in India 2020
#1. SBI Bank Car Loan
SBI finances up to 90% of on road price for brand new passenger cars including MUVs and SUVs.
The benefit of SBI bank car loan is that there are NIL processing charges with no prepayment penalty or foreclosure charges. The maximum car loan tenure is of 7 years and the interest calculation is on daily reducing balance.
Fixed Rate – 9.30% to 9.80%
- Loan amount – 90% of on road price
- Processing charges – NIL
- Prepayment or foreclosure charges – NIL
- Insurance – optional SBI life insurance cover
SBI Bank Car Loan Eligibility
| Borrower | Salaried employee |
Professionals, self-employed |
Persons engaged in agriculture |
| Age | 21 to 65 years | 21 to 65 years | 21 to 65 years |
| Income | Minimum 2.5 Lacs p.a |
Net profit or GTI* of 3 Lacs p.a |
Net annual income Rs. 4 Lacs |
| Maximum Loan Amt |
48 times net monthly income |
4 times net profit or GTI |
3 times net annual income |
*GTI – Gross taxable income
Documents Required
| Salaried employee | Professionals, self-employed |
Persons engaged in agriculture |
| Identity and address proof |
Identity and address proof |
Identity and address proof |
| Latest salary slip, Form 16 |
last 2-year ITR and audited balance sheet |
Documentary proof of land ownership and activity |
| 6-month bank account stm |
6-month bank account stm |
6-month bank account stm |
Other SBI Car Loan schemes
- SBI Loyalty car loan scheme for home loan borrowers
- SBI assured car loan scheme- based on 100% FD for on road price
- SBI car loan lite scheme – for persons engaged in economic activity which gives income but with no proof of income
- No processing charges
- NIL prepayment penalty or foreclosure charges
- Longer processing time
- Favours customers having salary account with SBI
#2. HDFC Bank Car Loan
A Car loan from HDFC Bank has features like a step-up loan, balloon repayment schemes, top -up loans with flexible repayment tenure.
The bank finance a wide range of cars and multi-utility vehicles up to Rs. 3 Crores for tenure up to 84 months.
HDFC Bank even has autopedia mobile app to help customers to compare, research and read reviews on new cars or even apply for a loan.
Rack interest rate 9.75% to 10.60% depending on the segment of the vehicle.
- Loan amount – 100% of the on-road price on specific models
- Processing charges – 0.4% of the loan amount, minimum Rs. 3000 and maximum Rs. 10,000.
- Prepayment or foreclosure charges – up to 6% of the principal outstanding.
- Insurance – Comprehensive Suraksha Kawach insurance from HDFC
HDFC Bank Car Loan Eligibility
| Borrower | Salaried | Professionals, self employed |
| Age | 21 to 53 years | 21 to 58 years |
| Income | Min 3 Lacs p.a | Earn 3 Lacs p.a |
| Employment/ Business status | Job for 2 years, 1 year with current employer | In business for 2 years |
| Others | Need to have a telephone or postpaid mobile |
Documents Required
| Salaried employee | Professionals, self employed |
| Identity and address proof | Identity and address proof |
| Latest salary slip, Form 16 | Last 2 year ITR and audited balance sheet |
| 6 month bank account statement | 6 month bank account statement |
- Flexible repayment tenure
- Quick loan approval
- Foreclosure charges
- 2% Overdue EMI interest
Check out – Best bank for home loan in India
#3. Axis Bank Car Loan
The unique benefit of Axis Bank is that you earn edge rewards points for taking a car loan. 350 reward points if post disbursal documents are submitted within 60 days of first loan installment being disbursed.
Axis bank offers maximum loan up-to 100% of the on road price for a longer tenure of up to 8 years.
Starting at 9.25% to 11.50%
- Loan amount – 100% of on road price
- Processing charges – Minimum Rs. 3500 and maximum Rs. 5500.
- Prepayment or foreclosure charges – 5% of the principal outstanding.
Axis Bank Car Loan Eligibility
| Borrower | Salaried | Professionals, self employed |
| Age | 21 to 70 years | 18 to 75 years |
| Income | Min 2.4 Lacs p.a | Min 1.8 Lacs p.a |
| Employment/ Business status | 1 year with current employer | In business for 3 years |
Documents Required
- Identity and address proof
- Application form
- Age Proof
- Income proof & Bank statement
- Signature verification proof
- Invoice or rate list
- Longer tenure of 8 years
- Earn edge reward points
- 100% on road price
- 2% Penal interest for late payment
- Favors priority, wealth and privee banking customers
#4. PNB Bank Car Loan
PNB finances the purchase of a new car, jeep, van, multi-utility and sports utility vehicles. The bank even reimburses within 3 months the cost of a new car purchased out of own funds.
Floating – MCLR + 0.60% to 1.05% based on credit scores
Fixed – MCLR + 0.95%
Present MCLR – 8.45%
- Loan amount – Rs. 1 Crore or 25 times of the net monthly salary whichever is lower. Margin 15% on road price. 25% margin in case of reimbursement.
- Processing charges – Up to Rs. 6 Lacs – Rs. 1000 and Rs. 1500 above Rs. 6 Lacs.
- Prepayment or foreclosure charges – NIL for funds from own sources others 2% of the outstanding pre-paid.
PNB Bank Car Loan Eligibility
- Cars to be used for private purpose
- A minimum net monthly salary of Rs. 20,000
Other PNB Car Loan schemes
- PNB Pride car loan for government employees
- Reimburses car purchased from own funds
- 25% margin requirements for reimbursement of car loan
#5. ICICI Bank Car Loan
ICICI Bank offers car loans for a new car, pre-owned car and even loan against the car.
The amount of the loan is up to 100% on the ex-showroom price for tenures up to 7 Years
Fixed – 8.65% to 16.70%
- Loan amount – up to 100% on ex-showroom price
- Processing charges – Minimum – Rs. 3500 and maximum – Rs. 8500
- Prepayment or foreclosure charges – 5% of the principal outstanding or interest outstanding for unexpired loan period whichever is lower. 6% in cases of part pre-payment.
ICICI Bank Car Loan Eligibility
The bank does not specifies eligibility, but helps you with online eligibility calculator based on your relationship with ICICI Bank.
Documents Required
| Salaried | Professionals, self employed | self employed Non Professionals |
| Application form | Application form | Application form |
| Identity, Age and address proof | Identity, Age and address proof | Identity, Age and address proof |
| Latest salary slip, Form 16 | last 2 year ITR | last 2 year ITR and audited balance sheet |
| Employment stability proof | Business stability and ownership proof | Business stability and ownership proof |
| bank account statement | bank account statement | bank account statement |
- Online application with instant e-approval
- Quick processing
- 2% late payment penalty p.m.
- Part pre-payment available only to salaried customers
You may also like to read – Best car insurance in India
#6. Magma Fincorp Car Loan
The car loan from Magma Fincorp lets you have flexible loan payment options like cash installments, auto debit, ECS or through postdated cheques.
The NBFC provides end to end doorstep service helpful for collecting documents and quick processing in less than 4 hours.
Magna also provides easy car loans without income documents for existing customers with good repayment records.
12% to 16%
- Loan amount – up to 100% of the value of the car
- Processing charges – Minimum – Rs. 0 and maximum – Rs. 4625
- Prepayment or foreclosure charges – 5% of the principal outstanding
Magma Fincorp Car Loan Eligibility
| Borrower | Salaried | Professionals, self employed |
| Age | 21 to 60 years | 21 to 67 years |
| Income | Min 1.5 Lacs p.a | Min 1.0 Lacs p.a |
| Employment/ Business status | 2 year with current employer | In business for 2 years |
| Residential Stability | 1 Year | 1 Year |
Documents Required
Magma Fincorp does not specify the list of the required documents but only reveals that the same vary from scheme to scheme.
- Flexible repayment options
- Faster processing under less than 4 hours
- Rs. 1 lac income requirement for self-employed
- Few branches across India
- 3% pm late payment penalty
#7. IDBI Bank Car Loan
Car loan from IDBI Banks carries interest rates starting from 9.30% for CIBIL scores of 801 and above.
The bank even considers CIBIL scores of -1, 1 to 5 but does not finance auto loans to persons having CIBIL scores of less than 650.
9.30% to 9.90%
- Loan amount – up to 90% of the ex-showroom price
- Processing charges – Rs. 1000
- Prepayment or foreclosure charges – 1% of the outstanding loan amount within 6 months. After six months from own source- NIL
IDBI Bank Car Loan Eligibility
| Borrower | Salaried | Professionals, self employed |
| Age | 21 to 70 years | 21 to 70 years |
| Income | Min 2.4 Lacs p.a | Min 2.4 Lacs p.a |
| Income proof | Salary slip, ITR, Bank statement | Last 2 years certified financials Balance sheet and Bank statement |
| Employment/ Business status | — | 2 years in a profession |
Documents Required
| Salaried | Professionals, self employed |
| Age, Identity and Address Proof | Age, Identity and Address Proof |
| 2 month Salary slip, 2 year ITR | Balance Sheet and ITR for last 2 years |
| 4 months Bank statement | 6 months Bank statement |
- Lowest processing charges of Rs. 1000
- 1% part payment or foreclosure charges, NIL after 6 months
- Rs. 1000 charged in case of change of vehicle or dealer
- 2% penal interest for late payment
#8. Sundaram Finance Car Loan
Sundaram finance offers up to 100% funding on the ex-showroom price of all make and models of Indian or imported cars.
The car loans have installments of 12 to 60 months but Sundaram finance also has flexible monthly installment option for 5+2 years.
8.75% to 11%
- Loan amount – up to 100% of the ex-showroom price
- Processing charges – Rs. 3500
- Prepayment or foreclosure charges – 3% of the outstanding loan amount
Sundaram Finance Car Loan Eligibility
| Borrower | Salaried | Professionals, self employed |
| Age | 21 to 55 years | 21 to 65 years |
| Income | Min 2.5 Lacs p.a | Min 2.5 Lacs p.a |
| Income proof | Salary slip, ITR, Bank statement | Last 2 years certified financials Balance sheet and Bank statement |
| Employment/ Business status | 3 years of cumulative service | 2 years in a profession |
Documents Required
| Salaried | Professionals, self employed |
| Loan Application | Loan Application |
| Signature, Identity and Address Proof | Business, Identity and Address Proof |
| 3 month Salary slip, latest ITR | Balance Sheet and ITR for last 3 years |
| 6 months Bank statement | 6 months Bank statement |
- Loan for imported cars
- Loan tenure for 60 months
- 3% foreclosure charges
#9. Bank of Baroda Car Loan
With Bank of Baroda car loan, you can select vehicle like a hatchback, sedan, MUV, SUV, Sports car or even luxury cars for finance.
The bank offers car loans up to Rs. 1 Crore and is available to all including NRIs and PIOs.
You need a CIBIL score of 725+ for any type of car loan from Bank of Baroda
MCLR + SP + 0.25% to MCLR + SP + 2%. Present 1-year MCLR is 8.65%
- Loan amount – up to 90% of the on road price
- Processing charges – 0.5% of the loan amount, maximum Rs. 10000
- Prepayment or foreclosure charges – NIL
Bank of Baroda Car Loan Eligibility
The eligibility for car loans in Bank of Baroda is decided by the repayment capacity.
| Borrower | Salaried | Professionals, self employed |
| Age | 21 to 70 years | 21 to 70 years |
| CIBIL Score | 725+ | 725+ |
For Salaried
| Gross Monthly Income | EMI should not exceed |
| less than 50,000 | 60% |
| 50,000 to 1,50,000 | 70% |
| Above 1,50,000 | 80% |
For others
| Average Annual Income for the last 2 years | EMI should not exceed |
| less than 6 Lacs | 60% |
| Above 6 Lacs | 80% |
Documents Required
| Salaried | Professionals, self employed |
| Loan Application | Loan Application |
| Identity and Address Proof | Identity and Address Proof |
| 3 month Salary slip, latest ITR | Balance Sheet and ITR for last 2 years |
| 6 months Bank statement | 6 months Bank statement |
- Loans for sports and luxury cars
- Cars loan available to residents, NRIs and PIOs
- No prepayment or foreclosure charges
- CIBIL score of 725+
Check out – Best bank for education loan in India
#10. Federal Bank Car Loan
Federal Bank finances car loans up to 100% of the ex-showroom price for buying a new car, used car, new two-wheeler and even reimbursement of car loans.
The Federal Bank gives free personal insurance up to Rs. 10 Lacs. Further, there are no prepayment or foreclosure charges.
Starting at 9.2%
- Loan amount – up to 100% of the ex-showroom price
- Processing charges – Minimum Rs1500 and maximum Rs. 2500
- Prepayment or foreclosure charges – NIL
Federal Bank Car Loan Eligibility
| Borrower | Salaried | Professionals, self employed |
| Age | 21 to 60 years | 21 to 60 years |
| Minimum take home salary after all EMIs | Rs. 20,000 | Rs. 20,000 |
Documents Required
| Salaried | Professionals, self employed |
| Loan Application | Loan Application |
| Age, Identity and Address Proof | Age, Identity and Address Proof |
| 3 month Salary slip, 2 years ITR | Balance Sheet and ITR for last 2 years |
| 6 months Bank statement | 12 months Bank statement |
| — | Proof of business |
- 100% of ex-showroom price
- No prepayment or foreclosure charges
- 2% late repayment penalty
#11. Central Bank of India Car Loan
Central Bank of India finances car loan for a maximum amount of Rs. 75 Lacs.
The bank charges a lower margin of 10% for loans up to Rs. 20 Lacs. Whereas margin in case of loans above Rs. 20 Lacs is 20%.
Floating – MCLR + 0.4%
Fixed – MCLR + 0.4%
- Loan amount – up to 75 Lacs
- Processing charges – 0.5% of the car cost; minimum Rs. 2000 and maximum Rs. 20000
- Prepayment or foreclosure charges – NIL from own sources. 1% in case of loan takeover.
Central Bank of India Car Loan Eligibility
| For all borrowers | |
| Age | 18 to 65 years |
| Gross annual income for both salaried and self-employed | Rs. 2.4 Lacs |
Documents Required
| Salaried | Professionals, self employed |
| Loan Application | Loan Application |
| Age, Identity and Address Proof | Age, Identity and Address Proof |
| 3 month Salary slip, 2 years ITR | Balance Sheet and ITR for last 3 years |
| 6 months Bank statement | 12 months Bank statement |
- 10% margin for a loan up to Rs. 20 Lacs
- Fixed and floating rate car loan
- 36 months period for a fixed-rate loan
You may also like to read – best banks for a personal loan in India
Car Loan Interest Rate Comparison
| Bank | Car Loan Interest Rate |
| SBI Bank | 9.30% to 9.80% |
| HDFC Bank | 9.75% to 10.60% |
| Axis Bank | 9.25% to 11.50% |
| PNB | 9.05% to 9.50% |
| ICICI Bank | 8.65% to 16.70% |
| Magma Fincorp | 12% to 16% |
| IDBI Bank | 9.30% to 9.90% |
| Sundaram Finance | 8.75% to 11% |
| Bank of Baroda | 8.90%+SP to 10.65%+SP |
| Federal Bank | 9.2% |
| Central Bank of India | MCLR + 0.4% |
Car loan EMI calculator
Coming Soon..
6 Things You Should Consider While Having the Best Car Loan in India
#1. Car Insurance
Banks have made insurance mandatory for availing auto loans. Recent, Supreme Court ruling has made purchasing upfront three to five-year insurance cover compulsory.
#2. Loan Amount
Most of the lenders require you to make a downpayment of 5% to 80% upfront which is also called margin. Only HDFC and ICICI Bank finance 100% of the ex-showroom price.
However, the ex-showroom price does not include local duties and statutory charges.
#3. Period of Loan
You can get a car loan with a maximum period of 7 years. EMI will be less for a longer period loan but the amount of interest paid will be higher.
Remember shorter term will have lower rates.
#4. Interest Rate
The interest rate is the key differentiator while finalizing a car loan. Banks offer fixed as well as floating interest rates ranging from 8.65% to 11.50%.
Do not get fooled by the lower flat rate of interest. A flat 10% interest rate can cost you more than 15% interest rate charged on reducing balance.
#5. Processing Fees and Time
The banks charge processing fee as a flat amount ranging from Rs. 3000 to as high as Rs. 10000 or as a percentage of loan amount between. The processing charges are around 0.5% of the loan amount.
#6. Prepayment or Foreclosure Charges
Usually, banks levy around 5 to 8% as prepayment or foreclosure charges. You may tend to prepay or foreclose loan as soon as you receive extra money hence go for a bank with lowest foreclosure charges.
Factors that Affect Car Loan Interest Rate
Relationship
A good long-standing relationship can help you bargain not only a higher car loan amount but also at a reduced interest rate. This happens because of patronage and the bank is aware of your financial status and dealings.
Credit Report
Higher credit scores above 700+ reflect creditworthiness. Banks are keen to offer lesser interest rates to persons with high scores in comparison to an individual with lower scores.
If you don’t know your CIBIL score, then you can check your CIBIL score for free. In case your CIBIL score is low, then you should check how to improve the CIBIL score.
Amount of Loan or Down Payment
Higher the down payment, the lesser will be the loan amount which shows a sound financial standing. Which can help you get a lower interest rate.
Time Period
The longer time period has lesser interest rates which get reflected in lower EMI. But at the same time, the overall interest cost increases.
Income or Salary
Banks do prefer salaried employees for loans because of the regular and stable source of income. A person working on PSUs or MNCs with a higher salary has a good chance of getting a higher loan amount at a lower interest rate.
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