Car Loan in India
A car loan lets you spread the cost of a new or used car across fixed monthly instalments while the vehicle stays hypothecated to the lender until the final payment. Rates, funding limits and tenure differ widely between banks and NBFCs, so the cheapest advertised rate is rarely the cheapest overall deal once processing fees and foreclosure terms are included.
Rates from
8.85% p.a.
Funding
Up to 100%
Tenure
1 - 8 years
Approval
2 - 5 working days
Compare Car Loan Interest Rates
Indicative terms for new car loans
| Lender | Interest rate | Funding | Maximum tenure | Processing fee |
|---|---|---|---|---|
| State Bank of India | 8.85% - 10.50% | Up to 90% of on-road price | Up to 7 years | 0.25% of loan (capped) |
| HDFC Bank | 9.20% - 12.00% | Up to 100% of ex-showroom | Up to 7 years | Up to ₹ 5,000 |
| ICICI Bank | 9.10% - 12.50% | Up to 100% of ex-showroom | Up to 7 years | Up to ₹ 6,000 |
| Axis Bank | 9.30% - 13.00% | Up to 95% of on-road price | Up to 8 years | Up to ₹ 5,500 |
| Bank of Baroda | 8.95% - 11.50% | Up to 90% of on-road price | Up to 7 years | 0.25% of loan |
| Kotak Mahindra Bank | 9.40% - 13.50% | Up to 90% of on-road price | Up to 7 years | Up to ₹ 6,500 |
Rates and fees are indicative, revised frequently by lenders, and depend on your credit profile. Verify with the bank before applying.
Eligibility Criteria
Salaried applicants
- Age between 21 and 60 years at loan maturity
- Minimum net monthly income of about ₹ 25,000, higher in metro cities
- At least one year with the current employer and two years of total work experience
- Credit score of 750 or above for the best advertised rates
Self-employed applicants
- Age between 25 and 65 years at loan maturity
- Business continuity of at least two to three years
- Audited financials or ITRs for the last two assessment years
- Stable bank balance and no recent cheque bounces
Documents Required
Identity and address
- PAN card (mandatory)
- Aadhaar, passport or voter ID
- Recent utility bill or rent agreement
Income proof
- Last 3 months' salary slips
- 6 months' bank statements
- Form 16 or last 2 years' ITR
Vehicle and other
- Proforma invoice from the dealer
- Passport-size photographs
- Existing loan statements, if any
How to Apply
- 1
Check eligibility
Confirm your age, income and credit score against the lender's published criteria.
- 2
Compare offers
Look at the effective rate, processing fee and foreclosure terms together, not the headline rate alone.
- 3
Apply with documents
Submit identity, address, income and vehicle quotation documents online or at the branch.
- 4
Sanction and disbursal
On approval the lender issues a sanction letter and pays the dealer directly, usually within 2 to 5 working days.
Car Loan FAQs
What interest rate can I expect on a new car loan?
New car loans in India generally start between roughly 8.8 and 9.5 per cent per annum for salaried applicants with a strong credit score. Used car loans are priced higher, often 12 per cent and above, because the asset depreciates faster.
How much of the car price will a bank finance?
Most lenders fund 80 to 90 per cent of the on-road price, and some fund up to 100 per cent of the ex-showroom price. The rest is your down payment.
What credit score is needed for a car loan?
A score of 750 or above usually secures the best advertised rates. Applications below 700 are often approved at a higher rate or with a larger down payment.
Can I prepay or foreclose a car loan?
Yes. Floating-rate loans to individuals typically carry no foreclosure charge, while fixed-rate loans may attract a fee of about 3 to 5 per cent of the outstanding principal. Confirm the clause in your sanction letter.
Should I choose a longer tenure to reduce my EMI?
A longer tenure lowers the monthly outgo but increases total interest and the period during which you owe more than the car is worth. Pick the shortest tenure your budget comfortably supports.
Prices and specifications are indicative and may change. Verify details with an authorized dealership.
Luxurycarwale does not lend money and is not a financial advisor. Loan terms shown are for comparison only.