Car loan rates start at 7.35%: Check EMIs and processing fees of 18 lenders

A car loan can help a borrower spread the cost of a vehicle over several years. Still, interest rates and other expenses can affect the overall cost of borrowing. This makes it vital for aspiring car loan applicants to diligently compare lending institutions on aspects such as interest rates, equated monthly instalment (EMI), and processing charges.

Such an approach can go a long way in helping borrowers acknowledge and understand the overall cost before applying. It can also assist in better financial planning and towards devising a strategic approach towards car loan EMI repayments.

As per the data compiled by Paisabazaar, car loan interest rates among 18 lending institutions begin from 7.35% per annum. UCO Bank, for example, has the lowest starting rate. This is followed by other prominent lending institutions such as Maharashtra Bank and Canara Bank, both offering car lorates starting at 7.45%.

For a simple example, on a ₹5 lakh car loan for 5 years, the EMI at UCO Bank ranges primarily from ₹9,983 to ₹10,624 depending on the applicable interest rate. On similar lines, at Bank of Maharashtra, the EMI ranges from ₹10,007 to ₹11,059. Keeping in mind these fundamentals, the complete list is discussed below:

It is vital to note that the interest rate range varies widely across lending institutions. Punjab and Sindh Bank has the widest range in the table, from 7.55% to 14.05%, whereas Bank of India charges between 7.60% and 12.55%. Hence, borrowers should note that the final interest rate offered may depend on factors such as their credit profile, loan amount, tenure, and lender-specific eligibility criteria.

This expense must be borne by the applicant, and it can add to the overall borrowing cost. Hence, it again requires accurate calculations by the applicant to ensure the best possible car loan is secured.

Bank of Maharashtra offers a 0.25 percentage point interest-rate concession to eligible existing customers with at least six months of relationship with the bank. Canara Bank offers a 50% waiver on its processing fee till 31 December 2026.

In summary, aspiring borrowers should, before locking in on any particular car loan, diligently check and compare the actual rate offered, the EMI they will pay, the total interest to be paid over the loan's entire tenure, along with processing charges, before opting for any particular car loan.

In case of doubts, it is wise to seek professional guidance from a certified financial advisor. It is also important to keep in mind that a lower advertised rate may not always translate into the lowest overall borrowing cost.