Car Loan Interest Rates

I have read the Privacy Policy & Agree to Terms & Conditions and authorize Dialabank & its partner institutions to Call or SMS me with reference to my application.

Buy your dream Car

Rates as low as 7.35%*
Up to 100% Funding
Doorstep Service
Hassle-free Disbursal
Unbiased Experts Advice

Car loan Interest RateEvery common man dreams of a car they wish to own and ride as soon as they start earning. But this dream comes true for just a few due to financial constraints. Car Loans allow you to make this dream of your come true at the Lowest Car Loan Interest Rates and minimum documentation. It is a wise option to finance your car through a reputed financing institution in case you face a shortage of funds for purchasing a vehicle of your liking.

Car Loans are a widely chosen method to finance a car as it is a secured type of loan. One must keep in mind that the car you purchase through the loan amount acts as collateral security and the lending institution shall confiscate it in a situation where the borrower fails to repay the loan amount.

Why should one choose Car Loan?

    1. Easy monthly repayment options
    2. Instant Disbursal
    3. Loan Tenure ranges from 1-7 years
    4. Car Loan Interest Rates are affordable
    5. No hidden charges

Car Loan Interest Rates

Although the car loan interest rates depend on the base rates as per RBI directives, there can be seen a variation in the rates from bank to bank. Hence, a deal with a lower car loan interest rate is advisable to avoid any further burden of repayment.

Interest Rate 7.70% onwards
Processing Fee Min 0.24% of the loan amount
Loan Tenure 1 year to 7 years
Prepayment charges Varies with Banks
Loan to Value Up to 100% of ex-showroom price
  • Car Loan Interest Rates depend upon numerous factors such as type of car, occupation, annual income, credit score, loan tenure, and the loan amount requested.
  • The loan amount sanctioned by the bank further is dependent upon the income of the applicant and type of car they wish to purchase.

Types of Car Loan Interest Rates

A borrower has a couple of options of car loan interest rates to choose from while applying for a car loan. Mainly there are two types of Car Loans:

  1. Fixed Interest Rates: The interest rate on the car loan remains fixed throughout the tenure of the loan. There is no fluctuation and the rate is not dependent upon the market trend. Upon negotiation with the dealer, you can choose an appropriate interest rate which will remain constant. One can go for this type of interest rate if they want to avoid the chance of any uncertainty in the market trend.
  2. Floating Interest Rates: Unlike fixed interest rates, these fluctuate upon base rate or MCLR changes as per RBI directives. Generally, floating car loan interest rates are lower than fixed interest rates. But it may destabilize your financial planning as upon a rise in interest rates, EMI payment will also be higher and vice-versa.

Car Loan Interest Rates Offered By Leading Banks and NBFCs Across India

HDFC Bank:

HDFC Bank Car Loan

Car Loan Amount

100% (ex-showroom price)

Tenure

up to to 7 years

Interest Rate

9.25% onwards

Characteristics

  • The interest rate to be charged is fixed.
  • The loan is usually approved in 30 minutes.
  • Down payment and EMI are low making it affordable.

State Bank Of India (SBI):

SBI Car Loan

Car Loan Amount

85% (on-road price)

Tenure

up to 7 years

Interest Rate

8% to 9.75%

Characteristics

  • Daily reducing balance method of Interest Calculation is used.
  • EMIs are not taken in advance.

IndusInd Bank:

IndusInd Bank Car Loan

Car Loan Amount

90 % of the ex-showroom price

Tenure

up to 5 years
Interest Rate

10.65%

Characteristics

  • Zero hidden costs
  • Transparent process with low EMIs.

Sundaram Finance:

Sundaram Finance Car Loan

Car Loan Amount

85% on New Cars (ex-showroom price)
60% on Pre-owned Cars (Purchase price of the Vehicle)

Tenure

up to 20 years

Interest Rate

8.60%

Characteristics

  • Lowest Waiting period with Low EMIs.
  • Affordable rates of interest.
  • Customized insurance options as per each applicant.
  • Pre-approved Loans to existing customers of the Bank

Axis Bank:

Axis Bank Car Loan

Car Loan Amount

85% (ex-showroom price)
95% (on select models)
Tenure

up to 8 years

Interest Rate

9.25% fixed

Characteristics

  • Best Interest Rates
  • Special schemes for Axis Bank Salary account holders.
  • The minimum amount to be loaned is Rs. 1 lac.

Union Bank:

Union Bank Car Loan

Car Loan Amount

Maximum 75 lakhs
Tenure

up to 7 years

Interest Rate

8.60% Floating

Characteristics

  • You can borrow a High Amount for purchasing your dream car.
  • Interest is charged on a Flat Rate basis.
  • No prepayments and processing fee charges.

Car Loan Interest Rates Features

  • Credit Score: If any individual has a CIBIL score above 750 and has a decent credit history, then banks approve for a car loan at affordable car loan interest rates. It is an important factor that banks consider while disbursing loans to ensure their repayment safety.
  • Loan Amount: Considering the cost of the car along with all the additional expenses, the loan amount must be decided. Generally, car loan interest rates are lower on the high loan amount and vice-versa but this trend varies from bank to bank.
  • Loan Tenure: The repayment tenure for the loan taken should be decided in such a way that it is not a burden on the borrower’s shoulders. One would always want to pay off the dues as soon as possible. Lenders charge a lower rate of interest on short loan tenure as compared to a longer tenure.
  • Income: The source and stability of the income of a borrower is an essential factor considered by the lenders before approving for a loan. The amount of loan disbursed also depends upon the income of an individual.
  • Customer Relationship: If an individual already has an existing account with the lender, or has a trusted relationship then they would generally be offered with reasonable car loan interest rates. Moreover, full financing of the car is also provided by some institutions in case of a customer relationship with the bank.

A standardized formula is used by the Car Loan EMI Calculator of Dialabank:

E= P. R. (1+R)^n/[(1+R)^n -1]

The variables of the formula are as follows –

P Determines the principal amount
R The rate of interest payable every month
N The total tenure in months
E Total EMI payable each month

Amortization schedule

For a car loan worth Rs. 8 Lakh for 5 years tenure at 9.5% interest rate.

Principal (Rs.) Interest (Rs.) Principal + Interest (Rs.) Balance to be paid (Rs.)
1 10468 6333 16801 789532
2 10551 6250 16801 778981
3 10635 6167 16801 768346
4 10719 6083 16801 757628
5 10804 5998 16801 746824
6 10889 5912 16801 735935
7 10975 5826 16801 724959
8 11062 5739 16801 713897
9 11150 5652 16801 702747
10 11238 5563 16801 691509
11 11327 5474 16801 680182
12 11417 5385 16801 668766

Fore-closure

  • No fore-closure allowed within 6 months from date of availing the car loan
  • 6% of Principal Outstanding for fore-closures within 1 year from 7th EMI
  • 5% of Principal Outstanding for fore-closures within 13-24 months from 1st EMI
  • 3% of Principal Outstanding for fore-closures post 24 months from 1st EMI

Processing Fee

The amount charged by the banks to the applicants for facilitating the processing of the loan application of the form is known as processing fees. The rates generally vary from bank to bank.

Lenders Car Loan Interest Rates Processing Fees
HDFC Bank Car Loan Starting from 9.25% p.a.  (Rack interest rate) 0.40%, Max ₹ 10,000 of the loan amount
ICICI Bank Car Loan Starting from 9.30% p.a. Rs.2,500 Min ,Max Rs. 5,000
SBI Car Loan Starting from 8.00% p.a. 0.51% Min Rs. 1,020 Max Rs. 10,200
Axis Bank Car Loan Starting from 9.25% p.a. Rs. 3500 to Rs. 5500
Bank of Baroda Car Loan Starting from 8.90% p.a. 2% of the Loan Amount plus GST
Federal Bank Car Loan Starting from 9.15% p.a. Minimum ₹ 1,500 and Maximum ₹ 2,500.
Union Bank of India Car Loan Starting from 8.60% p.a. 0.50% of the loan amount
Canara Bank Car Loan Starting from 7.75% p.a. Subject to a minimum of Rs.1,000 and a maximum of Rs.5,000
Indian Bank Car Loan Starting from 9.65% p.a. 0.22%(Maximum of Rs.10,191)

Eligibility for Car Loan

  1. Minimum age:  A salaries applicant must be 21 years and a self-employed applicant must be 30 years (co-applicant needed below 30 years)
  2. Maximum age: At loan maturity, a salaried applicant can be 65 years and a self-employed individual can be 60 years
  3. Minimum employment: Salaried individuals should be working for a minimum of 1 year in current employment and a minimum of 2 years of employment. If self-employed then the business should be running from the past 3 years
  4. Minimum Annual Income: For Salaried Rs.18000 / For Self- Employed– 2 years ITR (with previous ITR)

Documents Required for Car Loan

  1. Identity Proof: Passport copy / PAN Card / Voters ID card / Driving License
  2. Income Proof: For Salaried Latest salary slip with form 16 / For Self- Employed Latest ITR
  3. Address Proof: Ration card / Driving license / Voters card / Passport Copy / Telephone Bill / Electricity Bill / Life Insurance Policy / PAN Card
  4. Bank Statement: Last 3 months

How to Apply?

It is a simple and hassle-free process to apply for a car loan online. Just follow these steps and get the best deals in the market.

  • Visit DialaBank
  • On the homepage, go to Auto loans and select Car Loans.
  • You then need to fill an online application form and provide all the necessary details
  • Our Relationship Managers will then get in touch with you and assist you further.

Schemes under Car Loan

  • EMI in arrears scheme: This is the traditional repayment method using EMI, where the interest rate and payable principal amount is paid at the end of the month.
  • Advance EMI scheme: In this scheme, the borrower pays the EMI as well as interest at the beginning of the month instead of paying at the end of the month. So, at the beginning of every month, you pay the interest on the amount paid the previous month. You must note that the EMI should be 1% less than the interest charged on EMI in arrears.
  • Zero Interest scheme: This is a way of advertising the product by including an interest in the price of the car itself. No such loan with zero interest rate exists. It is a marketing tactic adopted by the lending institutions.
  • Flat Rate of Interest scheme: In this type of scheme, the borrower needs to pay the interest on the overall principal amount throughout the loan tenure until the maturity period. Suppose, a loan amount of Rs 5 lakhs at 10% for 5 years is availed, then you need to pay back rs 5lakh plus the interest amount of Rs 50,000 every year.
  • Reducing Balance Scheme: Under this scheme, the borrower needs to pay interest on the amount outstanding each month. The balance principal amount keeps reducing with each EMI. So, if you avail of an Rs. 5 lakh loan at 10% for 5 years, you need to pay a total of Rs. 5 lakhs plus interest on a reducing the basis which comes to Rs. 1,37,411 or Rs. 6,37,411 including principal. The EMI as per this case would sum up to Rs. 10,624, a good 15% less than that for a flat rate scheme.

Things to remember while applying for a Car Loan

  • Clear off all the previous debts and dues and maintain a good CIBIL score, preferably above 750
  • Make sure the documents you provide are updated and without any errors
  • Avail for a car loan from a reputed lending institution with a clear history to avoid any inconvenience in the future
  • Read the terms and conditions of the agreement thoroughly. There should be no discrepancies which might cause problems later on. Be aware of the hidden and additional charges (if any).
  • Make sure the repayment structure is clarified between the lender and the borrower

Leading Car Loan Providers (Click to Apply)

  1. HDFC Car Loan
  2. Kotak Mahindra Car Loan
  3. ICICI Car Loan
  4. Axis Bank Car Loan
Menu