Best Banks for Car Loan in India 2025: Compare Interest Rates, Benefits & Eligibility

 

🚗 Best Banks for Car Loan in India 2025: Compare Interest Rates, Benefits & Eligibility

Buying your dream car in 2025 is easier than ever—thanks to competitive car loan offers by top banks in India. Whether you want a hatchback, sedan, or SUV, the right car loan can make your purchase smooth, affordable, and stress-free.

In this guide, we’ve listed the best banks for car loans in India in 2025, along with their interest rates, features, and eligibility. Let’s help you pick the best one!

🏆 Top 7 Banks Offering Best Car Loans in India – April 2025

Here’s a quick comparison of interest rates, tenures, and processing fees:

BankInterest Rate (p.a.)TenureProcessing Fee
SBI8.70% – 9.30%Up to 7 yrs₹1,000 – ₹10,000
HDFC Bank9.10% – 10.50%Up to 7 yrsUp to ₹5,000 or 0.5%
ICICI Bank9.25% – 10.75%Up to 7 yrs₹3,500 – ₹5,000
Axis Bank9.00% – 10.50%Up to 7 yrs₹3,500 or 1% of loan amt
Kotak Mahindra9.25% – 10.50%Up to 5 yrs₹3,500 – ₹5,000
IDFC FIRST Bank9.00% – 10.25%Up to 7 yrs₹5,000 approx.
Bank of Baroda8.75% – 9.35%Up to 7 yrs₹1,500 or lower

💡 Interest rates may vary depending on your credit score, income, and loan amount.






 


🏦 1. SBI Car Loan – Best for Lowest Interest Rates

  • Interest Rate: Starts from 8.70% p.a.

  • Loan Amount: 85%–90% of on-road price

  • Special Offer: Lower rate for women borrowers

  • Why Choose SBI:

    • Transparent processing

    • Low processing fee

    • Excellent for salaried and government employees

🏦 2. HDFC Bank Car Loan – Best for Fast Disbursement

  • Interest Rate: 9.10%–10.50% p.a.

  • Tenure: Up to 7 years

  • Key Benefits:

    • Instant loan approval if you have an HDFC salary account

    • Special festive season discounts

    • Zero foreclosure charges in some cases

🏦 3. ICICI Car Loan – Best for High Loan Amount

  • Interest Rate: 9.25%–10.75% p.a.

  • Loan Amount: Up to 100% of ex-showroom price

  • Features:

    • Pre-approved offers for existing ICICI customers

    • Flexible repayment tenure

    • EMI starting from ₹1,622/lakh

🏦 4. Axis Bank Car Loan – Best for Self-Employed Individuals

  • Interest Rate: 9.00%–10.50% p.a.

  • Why It's Great:

    • Friendly documentation for self-employed

    • Fast processing

    • Online application with instant status tracking

🏦 5. Kotak Mahindra Bank – Best for Customizable Tenure

  • Interest Rate: 9.25% – 10.50% p.a.

  • Tenure: Flexible (1 to 5 years)

  • Unique Features:

    • Minimal paperwork

    • Quick loan disbursement

    • Special schemes for professionals and salaried class

🏦 6. IDFC FIRST Bank – Best for Used Car Loans

  • Interest Rate: 9.00% – 10.25% p.a.

  • Why Choose:

    • Used car loan options available

    • Online document upload and approval

    • Longer tenures reduce EMI pressure

🏦 7. Bank of Baroda Car Loan – Best for Government Employees

  • Interest Rate: 8.75% – 9.35% p.a.

  • Processing Fee: Very low or waived off for salary account holders

  • Benefits:

    • Higher loan margin

    • No hidden charges

    • Trusted public sector bank

🧾 Eligibility Criteria (General)

Most banks have similar eligibility:

CriteriaRequirement
Age21 to 65 years
EmploymentSalaried / Self-Employed
Minimum Income₹15,000/month (salaried)
Work Experience1 year for salaried, 2 years for business
CIBIL Score700+ preferred

📌 Always check with the bank’s branch or website for the latest eligibility updates.








📋 Required Documents for Car Loan

For Salaried:

  • PAN Card, Aadhaar Card

  • 3–6 months salary slips

  • Form 16 / ITR

  • Bank statements

For Self-Employed:

  • Business proof (GST/Udyam)

  • 2–3 years ITR

  • Audited balance sheet

  • Bank statement

💰 EMI Calculator Example

Let’s assume:

  • Car price: ₹8,00,000

  • Loan amount: ₹7,00,000

  • Interest rate: 9.5%

  • Tenure: 6 years

Monthly EMI = ₹12,563 approx.

🎯 Use online EMI calculators to customize your values based on loan amount and interest rate.

📝 How to Choose the Right Bank for a Car Loan

  • Compare interest rates and processing fees

  • Check if you’re eligible for pre-approved loans

  • Consider your CIBIL score—some banks offer better rates if score > 750

  • Evaluate customer service and support for repayment or foreclosure

  • Don’t ignore NBFCs like Tata Capital, Mahindra Finance, or Bajaj Finserv if your documents are weak

📌 Tips to Get Car Loan Approved Fast in 2025

  1. Maintain a good credit score – ideally above 700

  2. Apply with a co-applicant (spouse/parent) if your income is low

  3. Submit all required documents clearly and digitally

  4. Make a higher down payment to reduce loan amount and improve approval chance

  5. Negotiate at dealership—banks often have tie-ups for faster loans

💬 Frequently Asked Questions (FAQs)

Q. Which bank is best for lowest car loan interest in 2025?
A. SBI and Bank of Baroda currently offer some of the lowest interest rates starting from 8.70% p.a.

Q. Can I get 100% finance for a car?
A. Yes, banks like ICICI and some NBFCs offer 100% of ex-showroom price as loan.

Q. What is the tenure for car loans in 2025?
A. Most banks offer tenures from 1 to 7 years.

Q. Is there any tax benefit on car loans?
A. Only if the vehicle is used for business purposes—you may claim depreciation and expenses.

Q. Can I prepay my car loan?
A. Yes, but check with your bank for prepayment or foreclosure charges.

🏁 Final Words

Choosing the right bank for a car loan in India in 2025 can save you thousands in interest and make your buying experience smooth. Compare rates, check your credit score, and go with a lender that fits your needs.

At Finance Ka Sab, we help you make smarter financial decisions for loans, credit, and more.

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