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.
At the end of the article, I have listed all the factors that affect car loan interest rates. And 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.
You should plan to buy a car in the festival season to avail lucrative offers given by the banks.
Best Car Loan in India 2021
Table of Contents
#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 a low 0.20% processing charges. The maximum car loan tenure is of 7 years and the interest calculation is on a daily reducing balance.
Fixed Rate – 7.75% to 8.45%
- Loan amount – 90% of the on road price
- Processing charges – 0.20%
- Insurance – optional SBI life insurance cover
SBI Bank Car Loan Eligibility
| Borrower | Salaried employee |
Professionals, self-employed |
Persons engaged in agriculture |
| Age | 21 to 67 years | 21 to 67 years | 21 to 67 years |
| Income | Minimum 3.0 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 (professionals, business persons) engaged in economic activity which gives income but with no proof of income
- SBI Green car loan for the purchase of an electric vehicle
- Low 0.20% processing charges
- SBI Green car loan scheme
- Longer processing time
- Favours customers having salary account with SBI
#2. HDFC Bank Car Loan
HDFC Bank allows flexible car loan repayment schemes to choose from. The schemes are step-up loan, balloon repayment schemes, EMI options, 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 a separate portal hdfcbank.gaadi.com to help customers to compare, research and read reviews on new cars or even apply for a loan.
7.29% to 12.50% depending on the segment of the vehicle.
- Loan amount – up to 100% of the on-road price depending on specific models
- Processing charges – 1% of the loan amount, minimum Rs. 5,000 and a maximum of Rs. 10,000.
- Foreclosure charges –
NIL – if closed within 6 months
6% – if closed between 7 to 12 months
5% – if closed between 13 to 24 months
3% – if closed post 24 months. - Insurance – Bundled car insurance from HDFC
HDFC Bank Car Loan Eligibility
| Borrower | Salaried | Professionals, self-employed |
| Age | 21 to 60 years | 21 to 65 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 |
- Up to Rs. 3 Crore of car loan
- Flexible repayment tenure
- Quick loan approval
- up to 6% Foreclosure charges
- Rs. 700 non-refundable document charges
Check out – Best bank for home loan in India
#3. Axis Bank Car Loan
You earn edge rewards points for taking a car loan from Axis Bank. Axis bank offers car loan from Rs. 1 Lac and up-to 100% of the on-road price. The loans are for a longer tenure of up to 7 years.
8.75% to 11.00%
- Loan amount – 100% of the on-road price
- Processing charges – Minimum Rs. 3,500 and maximum Rs. 5,500.
- Part-payment or foreclosure charges – 5% of the principal outstanding.
Axis Bank Car Loan Eligibility
| Borrower | Salaried | Professionals, self-employed |
| Age | 21 to 60 years | 18 to 65 years |
| Income | Min 2.4 Lacs p.a | Min 1.8 Lacs p.a for selected models Others – Rs. 2 Lacs |
| Employment/ Business status | 1 year continuous 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
- Proforma Invoice
- Longer tenure of 7 years
- Earn edge reward points
- up to 100% of on-road price
- 2% Penal interest for late payment
- Rs. 500 documentation charges
- 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 the cost of a new car purchased out of own funds, if applied for a car loan within 3 months of purchase.
Floating – RLLR + 0.75% to 1.0% based on credit scores
Present RLLR – 6.80%
Fixed – MCLR + 0.95%
Present MCLR – 7.35%
- Loan amount – Rs. 1 Crore or 25 times of the net monthly salary whichever is lower. Margin 15% of the on-road price. 25% margin in case of reimbursement.
- Processing charges – 0.25%, minimum – Rs. 1,000, maximum – Rs. 1,500
- Prepayment or foreclosure charges – For floating rate car loans – NIL. In the case of fixed-rate – 2% of the outstanding pre-paid or NIL – if loan repaid from own sources.
PNB Bank Car Loan Eligibility
- Cars to be used for private purpose
- A minimum net monthly salary of Rs. 25,000
Other PNB Car Loan schemes
- PNB Pride car loan for government employees
- Reimburses car purchased from own funds
- Fixed & floating rate of interest
- 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 car. The amount of the loan is up to 100% of the on-road price for tenures up to 7 Years
Fixed – 7.50% to 13.75%
- Loan amount – up to 100% on ex-showroom price
- Processing charges – Rs. 3,500 to Rs. 8,500 depending on the car segment
- Foreclosure charges – 5% of the principal outstanding or interest outstanding for unexpired period of loan whichever is lower.
- Part Pre payment charges – 6% in case of part pre-payment.
ICICI Bank Car Loan Eligibility
The bank does not specifies eligibility, but has an online eligibility calculator on its website which is based on your existing relationship with ICICI Bank.
Documents Required
| Salaried | Professionals, self employed | self employed Non Professionals |
| Application form | Application form | Application form |
| KYC docs | Identity, Age and address proof | Identity, Age and address proof |
| Income proof | Latest salary slip, Form 16 | last 2 year ITR and audited balance sheet |
| Other docs | Employment stability proof | Business stability and ownership proof |
| bank account statement | Yes | Yes |
- Online application with instant e-approval
- Quick processing
- 2% late payment penalty p.m.
- Rs. 650 documentation charges and host of other charges
You may also like to read – Best car insurance in India
#6. Magma Fincorp Car Loan
Magma Fincorp lets you have flexible loan repayment modes like through cash deposits, ECS or postdated cheques.
Magma provides end to end doorstep service by collecting documents and quick processing.
Magna also provides easy car loans without income documents for existing customers with good repayment records.
But the maximum amount of loan that you can avail is –
- Salaried person – 3 times the annual salary
- Self-employed – 6 times of the annual income
12% to 16%
- Loan amount – up to 100% of the value of the car
- Processing charges – Minimum – Rs. 0 and maximum – Rs. 4,625 depending on the scheme and the loan amount
- 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% p.m. late payment penalty
#7. IDBI Bank Car Loan
Car loan from IDBI Banks carries interest rates starting from 7.50% for CIBIL scores of 801 and above.
The bank even considers CIBIL scores of -1, but does not finance auto loans to persons having CIBIL scores of less than 700.
7.50% to 8.10%
- Loan amount – up to 90% of the ex-showroom price
- Processing charges – Rs. 2,500, Minimum Rs. 1,500
- Foreclosure charges – For Fixed-rate loan – 1% of the outstanding loan amount within 6 months. After six months from own source- NIL. Floating rate loan – NIL foreclosure charges.
IDBI Bank Car Loan Eligibility
| Borrower | Salaried | Professionals, self employed |
| Age | 18 to 70 years | 18 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 |
- Lower processing charges of Rs. 1,500
- 1% part payment or foreclosure charges, NIL after 6 months
- Rs. 1,000 charged in case of change of vehicle or dealer
- 2% penal interest for late payment
#8. Sundaram Finance Car Loan
If you are planning to purchase imported cars then you can get up to 100% funding on the Indian or imported cars from Sundaram finance.
The car loans are for the ex-showroom price of all make and models.
The car loans have installments of 12 to 60 months but Sundaram finance also has a flexible monthly installment option for 5+2 years.
8.0% to 16.0%
- Loan amount – up to 100% of the ex-showroom price
- Processing charges – Rs. 3,500
- 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, Form 16 | Financial / audit report and ITR for last 2 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 a Bank of Baroda car loan, you can select vehicles 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. But the maximum amount of loan is up to 90% of the on-road price of the car.
You need a minimum CIBIL score of 701 for any type of car loan from Bank of Baroda
BRLLR+SP+0.25% to BRLLR+SP+3%.
Present BRLLR is 6.85% and SP is 0.25%. So car loan costs 7.35% to 10.1%
- Loan amount – up to 90% of the on road price
- Processing charges – 0.5% of the loan amount, minimum – Rs. 2,500 & maximum Rs. 10,000
- 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 | 701+ | 701+ |
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, Business and Address Proof |
| 3 month Salary slip, latest ITR or Form 16 | Balance Sheet, Form 26 AS 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 701+
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 accident insurance up to Rs. 10 Lacs for individuals.
Starting at 8.50%
- Loan amount – up to 100% of the ex-showroom price
- Processing charges – Minimum Rs – 1,500 and maximum – Rs. 2,500
- Prepayment or foreclosure charges – NIL for the floating-rate loan. In-case of fixed-rate car loans – 3%
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, Business and Address Proof |
| 3-month Salary slip, 2 years ITR or Form 16 | Balance Sheet and ITR for last 2 years |
| 6 months Bank statement | 12 months Bank statement |
| — | Proof of business |
- 100% of ex-showroom price
- Low Rs. 20,000 minimum monthly income
- 2% late repayment penalty
#11. Central Bank of India Car Loan
Central Bank of India finances car loans 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%.
7.25% to 7.45% depending on the risk category
- Loan amount – up to 75 Lacs
- Processing charges – 0.5% of the car cost; minimum Rs. 2,000 and a maximum of Rs. 20,000
- Prepayment charges – NIL
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
- Lowest 7.25% interest rate
- up to Rs. 20,000 processing fees
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 | 7.75% to 8.45% |
| HDFC Bank | 7.29% to 12.50% |
| Axis Bank | 8.75% to 11.0% |
| PNB | 7.55% to 8.30% |
| ICICI Bank | 7.50% to 13.75% |
| Magma Fincorp | 12% to 16% |
| IDBI Bank | 7.50% to 8.10% |
| Sundaram Finance | 8% to 16% |
| Bank of Baroda | 7.35% to 10.10% |
| Federal Bank | Starting at 8.50% |
| Central Bank of India | 7.25% to 7.45% |
Car loan EMI calculator
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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 25% upfront which is also called margin. Look for a bank that finances 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 7.25% to 13.75%.
Do not get fooled by the lower flat rate of interest. A flat 10% interest rate can cost you more than a 15% interest rate charged on reducing balance.
#5. Processing Fees and Time
The banks charge a processing fee as a flat amount ranging from Rs. 1,000 to as high as Rs. 20,000 or as a percentage of the loan amount.
Check processing charges, documentation and other charges before applying for a car loan.
#6. Prepayment or Foreclosure Charges
Usually, banks levy around 1 to 3% as prepayment or foreclosure charges.
You may tend to prepay or foreclose a loan as soon as you receive extra money hence go for a bank with the lowest foreclosure charges.
Factors that Affect Car Loan Interest Rate
#1. Relationship with the bank
A good long-standing relationship with the bank 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.
#2. 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.
#3. Amount of Loan or Down Payment
The 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.
#4. 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.
#5. 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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