If you’re planning to buy a new or used car in 2025, getting the right car loan can save you thousands of rupees over the repayment period. With multiple banks and lenders offering competitive rates, knowing the best car loan interest rates in India for 2025 will help you choose smartly.
Whether it’s your first car or an upgrade, the interest rate you pick decides your monthly EMI and total cost. Let’s compare top banks, their interest rates, and benefits so you can make the most cost-effective choice.
Key Highlights – Car Loan Interest Rates 2025
- Lowest interest rates start from just 7.90% p.a.
- Flexible repayment tenure from 1 to 7 years
- Loan-to-value ratio up to 90–100% of the car’s on-road price
- Quick online application and approval in as little as 24 hours
- Options available for new cars, used cars, and electric vehicles
Top Banks and Their Car Loan Interest Rates in 2025
| Bank Name | Interest Rate (p.a.) | Processing Fee | Loan Tenure | Max Loan Amount | Special Features |
|---|---|---|---|---|---|
| State Bank of India (SBI) | 8.40% – 9.20% | ₹1,000 – ₹1,500 | 1 – 7 years | Up to 90% of on-road price | Low processing fees, prepayment allowed |
| HDFC Bank | 8.50% – 9.50% | Up to ₹5,000 | 1 – 7 years | Up to 100% for select cars | Instant approval for existing customers |
| ICICI Bank | 8.75% – 9.65% | ₹3,000 – ₹5,000 | 1 – 7 years | Up to ₹25 lakh | Pre-approved offers for salary account holders |
| Punjab National Bank (PNB) | 8.65% – 9.35% | ₹1,000 – ₹1,500 | 1 – 7 years | Up to 90% | No prepayment penalty after 1 year |
| Axis Bank | 8.60% – 9.60% | ₹3,500 – ₹5,000 | 1 – 7 years | ₹1 lakh – ₹25 lakh | Special EV loan rates available |
| Bank of Baroda (BoB) | 8.40% – 9.10% | ₹1,500 – ₹2,000 | 1 – 7 years | 85–90% of on-road price | Low interest for women borrowers |
Note: Rates may vary based on credit score, income, loan amount, and location.
How to Choose the Best Car Loan in 2025
- Check Your Credit Score – A score above 750 usually gets you the lowest interest rates.
- Compare Processing Fees – A low interest rate with high fees might not be the cheapest deal.
- Look for Prepayment Options – The ability to repay early without penalty can save you money.
- Match EMI to Your Budget – Use a car loan EMI calculator to avoid financial strain.
- Check for Special Offers – Many banks offer lower rates for electric vehicles, women borrowers, or festive seasons.
Tips to Get the Lowest Car Loan Interest Rate in India
- Apply with a high credit score and stable income proof
- Choose a shorter loan tenure to reduce interest cost
- Negotiate with your bank if you have a long-standing relationship
- Opt for festive offers when banks lower rates and fees
- Compare both public and private sector banks before deciding
Why 2025 is a Good Year to Buy a Car on Loan
With India’s automobile market growing and banks competing for customers, car loan interest rates in 2025 remain relatively low compared to previous years. EV-friendly financing, instant digital approvals, and low processing fees make it easier for buyers to own a car without putting pressure on savings.
FAQs – Best Car Loan Rates in India 2025
Q1. Which bank offers the lowest car loan interest rate in 2025?
SBI and Bank of Baroda currently offer some of the lowest starting rates at around 8.40% p.a., depending on your profile.
Q2. Can I get 100% financing for a car loan?
Yes, some banks like HDFC Bank and ICICI Bank offer up to 100% financing for select car models and existing customers.
Q3. Is it better to take a car loan from a bank or an NBFC?
Banks usually offer lower interest rates, while NBFCs may provide easier approvals for people with low credit scores.
Q4. Can I prepay my car loan early?
Yes, most banks allow prepayment after 6–12 months, though some may charge a small penalty.
Q5. What documents are required for a car loan?
Common documents include identity proof, address proof, income proof, bank statements, and car quotation from the dealer.
Final Words
Choosing the right car loan in 2025 isn’t just about picking the lowest interest rate. Look at the total cost, flexibility, and repayment terms to find the best match for your budget. A little comparison now can save you a lot over the next few years.