If you’re planning to purchase a car in India and are seeking the best bank for a car loan with low interest rates, it’s essential to compare the offerings of various banks. As of May 2025, several banks provide competitive interest rates, flexible repayment options, and additional benefits. Here are four banks that stand out for their car loan offerings:
1. Canara Bank
- Interest Rate: Starting from 8.45% p.a.
- EMI per ₹1 Lakh (7 years): Approximately ₹1,581
- Processing Fee: 0.25% of the loan amount (₹1,000 – ₹5,000)
- Special Offers: Processing fees were waived during the Retail Loan Festival from January 1 to March 31, 2025 .
2. Bank of India (BOI)
- Interest Rate: Starting from 8.75% p.a.
- Loan Tenure: Up to 7 years
- Loan Amount: Up to 90% of the on-road price
- Processing Fee: Up to 0.25% of the loan amount (₹2,500 – ₹10,000)
- Special Features:
- Competitive interest rates for both new and used cars.
- 50% concession in processing fee for electric vehicle loans.
- EMI Example: For a loan of ₹1 lakh over 7 years, EMI starts at approximately ₹1,596.
3. Union Bank of India
- Interest Rate: Starting from 8.45% p.a.
- EMI per ₹1 Lakh (7 years): Approximately ₹1,581
- Processing Fee: Up to ₹1,000
- Features: Offers competitive rates with flexible repayment options
4. Bank of Baroda (BoB)
- Interest Rate: Fixed: 8.80% p.a. onwards; Floating: 9.15% p.a. onwards
- EMI per ₹1 Lakh (7 years): Approximately ₹1,611 (fixed)
- Processing Fee: Up to ₹750
- Highlights:
- Offers both fixed and floating rate options
- Flexible repayment tenures
- Special schemes for electric vehicles
| Bank | Interest Rate (p.a.) | Loan Tenure | Loan Amount | Processing Fee | EMI per ₹1 Lakh (7 years) |
|---|---|---|---|---|---|
| Canara Bank | 8.45% onwards | Up to 7 yrs | Up to 90% on-road | 0.25% of loan (₹1,000 – ₹5,000) | ₹1,581 |
| Bank of India | 8.75% onwards | Up to 7 yrs | Up to 90% on-road | Up to 0.25% (₹2,500 – ₹10,000) | ₹1,596 |
| Union Bank of India | 8.45% onwards | Up to 7 yrs | Up to 90% on-road | Up to ₹1,000 | ₹1,581 |
| Bank of Baroda | 8.80% onwards | Up to 7 yrs | Up to 90% on-road | Up to ₹750 | ₹1,611 |
Notes:
- EMI values are approximate for a loan of ₹1 Lakh over 7 years.
- Rates and charges may vary based on applicant profile, car model, and bank policies.
- It’s advisable to check with the bank for the latest and personalized quotes.
Comparison with other banks :
| Bank | Interest Rate (p.a.) | Loan Tenure | Loan Amount | Processing Fee | EMI per ₹1 Lakh (7 years) |
|---|---|---|---|---|---|
| SBI | 9.10% onwards | Up to 7 yrs | Up to 90% on-road | NIL | ₹1,614 |
| Bank of India | 8.75% onwards | Up to 7 yrs | Up to 90% on-road | Up to 0.25% (₹2,500-₹10,000) | ₹1,596 |
| ICICI Bank | 9.10% onwards | Up to 7 yrs | Up to 100% on-road | Up to 2% of loan amount | ₹1,614 |
| HDFC Bank | 9.20% onwards | Up to 7 yrs | Up to 100% on-road | Up to 1% (₹3,500 – ₹9,000) | ₹1,629 |
Disclaimer: The above information is for educational purposes only and should not be considered as investment advice. Please conduct your own research or consult a financial advisor before making investment decisions.
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