Best Car Loans In India
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Financial institutions of India provide loans for purchase of new, old and green cars to salaried, self-employed and business firms. Depending on banks, borrowers maintaining a good credit score, or have a successful history of on-time payment of equated monthly installments (EMIs), past loans, and credit card bills may get up to 100% financing of the “on-road price” of select new vehicles and models.
Forbes Advisor India examined 66 car loan products offered by financial institutions and created the 10 best car loans in India and a list of their offerings.
The interest rate and account details are accurate as of Jan. 25, 2023.
- Best Car Loan In India
- Axis Bank
- ICICI Bank
- SBI
- HDFC Bank
- Canara Bank
- Punjab National Bank
- Bank of Maharashtra
- Union Bank of India
- Bank of Baroda
- Dhanlaxmi Bank
- Forbes Advisor India Ratings
- Methodology
- What is a Car Loan and How Does it Work?
- Features of a Car Loan
- Car Loans Offered in India
- How to Calculate Car Loan EMI?
- Eligibility Criteria for Applying a Car Loan
- Application Process for a Car Loan
- Documents Required for Car Loan
- Factors that Can Affect Your Car Loan
Best Car Loan In India
BEST FOR PRE-APPROVED CAR LOANS
Axis Bank
New Cars RoI
8.55% – 13.05%
Old Cars Rol
13.35% to 16.90%
Green Cars RoI
50 bps lower
New Cars RoI
8.55% – 13.05%
Old Cars Rol
13.35% to 16.90%
Green Cars RoI
50 bps lower
Axis Bank has taken the top spot in Forbes Advisor India rating for best car loans in India for its range of offerings and favorable interest rates on the retail loan. It offers up to 100% financing on the on-road price of the latest and existing models of new and green cars, and up to 95% on used cars (not older than 10 years).
Existing customers of Axis Bank can also get pre-approved car loans even before planning to buy a car. Such loans are helpful for buyers to worry less about the finance to buy a car as they will already have an “in-principle” car loan approval from the bank.
Besides, borrowers get benefits of balance transfer and top-up loans up to 150% of the original car loan amount. An additional INR 500 is levied as documentation charge. There are also registration and related charges, and penalty is levied upon missing EMI payments.
Extra Details
Eligibility: Minimum yearly income of salaried borrowers should be INR 2.4 lakh and INR 2 lakh for self-employed.
Processing fee: New cars – INR 3,500 to INR 5,000; old cars – INR 6,000.
Foreclosure and part-payment: 5% of the outstanding principal amount.
How to apply: Individuals applying online can get quotations of the price of a car selected from the list of brands and models on the bank’s website. The bank’s agent will collect relevant documents to process the application. Alternatively, one can call the bank’s toll-free number or visit the bank’s nearest branch to apply for a car loan by giving out details of the vehicle and the car dealer.
- Provides loans to purchase new, used and electric cars.
- Availability of loan against car and top-up loans.
- 100% financing of new and green cars.
- Track application online.
- Customer support via live agent chat online, virtual assistant, whatsapp banking, email, SMS and helpline numbers.
- Car loan is provided only to car dealers verified by the bank.
BEST FOR CAR LOAN UPGRADE
ICICI Bank
New Cars RoI
8.75% onwards
Old Cars RoI
11.25% – 18%
Green Cars RoI
NA
New Cars RoI
8.75% onwards
Old Cars RoI
11.25% – 18%
Green Cars RoI
NA
ICICI Bank offers 100% financing on the on-road price of the latest and existing models of new cars, and up to 80% on used cars. Existing customers of the bank can also avail of funding against pre-owned vehicles or top-up loans on the original car loan amount. ICICI Bank also allows its existing customers to upgrade their existing loan to buy a new car.
An additional INR 500 is levied as documentation charge. Penal charges are applicable upon missing EMI payments, bounce cheque, etc. Other charges include registration fees.
Extra Details
Eligibility: Minimum yearly income of salaried borrowers should be INR 1.8 lakh and INR 2 lakh for self-employed.
Processing fee: 2% of the loan amount.
Foreclosure and part-payment: 5% of the outstanding principal amount.
How to apply: Existing customers can login to the bank’s internet banking to get an online quotation on select cars. Alternatively, one can call the bank’s toll-free number or visit the bank’s nearest branch to apply for a car loan by giving out details of the vehicle and the car dealer.
- Availability of loan against car and top-up loans.
- 100% financing of new cars.
- Customer care available via virtual assistant, whatsapp banking, email, SMS and helpline support.
- A need to verify if the car dealer is in the bank’s list.
- No loans available for green cars.
BEST FOR CAR LOANS AGAINST FD
State Bank of India
New Cars RoI
8.55% – 9.30%
Old Cars RoI
11.15% – 14.65%
Green Cars RoI
8.50% to 9.20%
New Cars RoI
8.55% – 9.30%
Old Cars RoI
11.15% – 14.65%
Green Cars RoI
8.50% to 9.20%
SBI offers loans on new, used and electric vehicles to salaried, self employed and individuals engaged in agriculture and allied activities. The bank may lend up to 90% financing of “on-road price” on new and green vehicles and models and up to 85% on pre-owned cars to borrowers maintaining a good credit score.
SBI also allows its existing home loan borrowers who have maintained a good repayment record for at least one year to avail a car loan at a reduced rate. Car loans are also available to depositors maintaining fixed deposits with the bank as collateral.
Extra Details
Eligibility: Minimum yearly income of salaried borrowers should be INR 3 lakh and INR 4 lakh for self-employed.
Processing fee: Nil on loan on new and green cars; up to 1.5% on used cars.
Foreclosure and part-payment: 3% on the outstanding amount if foreclosed within 24 months of loan disbursement.
How to apply: Existing customers can login to the bank’s internet banking to get an online quotation of select cars. Alternatively, one can call the bank’s toll-free number or visit the bank’s nearest branch to apply for a car loan by giving out details of the vehicle and the car dealer. Here’s the SBI car loan review.
- Nil processing fee on loans for new and green cars.
- Favorable interest rates.
- Customer care available via virtual assistant, whatsapp banking, email, SMS and helpline support.
- A need to verify if the car dealer is in the bank’s list.
- There’s no benefits of top-up loan and loans against a car available.
BEST FOR FULL FINANCE ON USED CARS
HDFC Bank
New Cars Apr
10% (up to Sep. 2022)
Old Cars Apr
15.05% (up to Sep. 2022)
Green Cars Rol
NA
New Cars Apr
10% (up to Sep. 2022)
Old Cars Apr
15.05% (up to Sep. 2022)
Green Cars Rol
NA
HDFC Bank offers 100% financing on the on-road price of the latest and existing models of new cars, and 80% to 85% on used cars. Existing customers of the bank can also avail of funding against pre-owned vehicles at an RoI between 13.75% to 16%. Top up loans are also available on the original car loan amount.
Charges apply for missing EMIs, registration and obtaining NOCs.
Extra Details
Eligibility: Minimum yearly income of salaried and self-employed borrowers should be INR 3 lakh.
Processing fee: 0.5%.
Foreclosure and part-payment: 6% on the outstanding principal amount.
How to apply: Existing customers can login to the bank’s internet banking to get an online quotation of select cars. Alternatively, one can call the bank’s toll-free number or visit the bank’s nearest branch to apply for a car loan by giving out details of the vehicle and the car dealer.
- Nil processing fee for loans up to INR 5 lakh availed by MSMEs.
- Availability of loan against car and top up loans.
- Customer care available via virtual assistant, whatsapp banking, email, SMS and helpline support.
- A need to verify if the car dealer is in the bank’s list.
- Loans are not available for purchase of EVs.
BEST FOR WOMEN CAR LOAN BORROWERS
Canara Bank
New Cars RoI
9.30% – 11.85%
Old Cars RoI
NA
Green Cars RoI
9.15% – 11.85%
New Cars RoI
9.30% – 11.85%
Old Cars RoI
NA
Green Cars RoI
9.15% – 11.85%
Canara Bank offers 0.50 bps less RoI to women borrowers than other borrowers. It provides up to 80% to 90% financing on the on-road price of a new car, 60% on pre-owned cars, and 75% to 85% on green cars.
Extra Details
Eligibility: Minimum yearly income of salaried borrowers should be INR 3 lakh, and INR 2.5 lakh for self-employed.
Processing fee: 0.25% of the loan amount.
Foreclosure and part-payment: NA.
How to apply: Interested borrowers will have to call the bank’s toll-free number or visit the bank’s nearest branch to apply for a car loan by giving out details of the vehicle and the car dealer.
- Loan available for green cars as well
- Customer care support available via whatsapp banking, email, SMS and helpline support.
- No top-up loan and loans against cars available.
- Need to call the bank to find out other charges.
BEST FOR REIMBURSEMENT OF NEW CARS
Punjab National Bank
New Cars RoI
8.70% – 9.50%
Old Cars RoI
9.35% – 10.15%
Green Cars RoI
9.70% – 10.50%
New Cars RoI
8.70% – 9.50%
Old Cars RoI
9.35% – 10.15%
Green Cars RoI
9.70% – 10.50%
Punjab National Bank offers loans on new, used and electric vehicles to salaried, self employed and business firms. The bank may lend up to 85% financing of ‘on-road price’ on new vehicles and models, and up to 75% on pre-owned cars, and 90% for EVs to borrowers maintaining a good credit score, or have a successful history of on-time payment of EMIs, past loans and credit card bills.
PNB Bank also offers to reimburse the cost of new cars (not more than three months old) to individuals and corporations. Existing home loan borrowers can also avail of a combo of home and car loans on lower rates.
Extra Details
Eligibility: Minimum yearly income of salaried borrowers should be INR 3 lakh.
Processing fee: INR 1,000.
Foreclosure and part-payment: NA.
How to apply: Interest borrowers will have to visit the bank’s nearest branch to apply for a car loan by giving out details of the vehicle and the car dealer.
- Loans available for green cars
- Low interest rates.
- Customer care available via virtual assistant, whatsapp banking, email, SMS and helpline support.
- A need to verify if the car dealer is in the bank’s list.
- There’s no benefits of top-up loan and loans against a car available.
- Information on other charges not available.
BEST FOR ZERO PROCESSING CHARGES ON CAR LOANS
Bank of Maharashtra
New Cars RoI
9.05% – 10.20%
Old Cars RoI
12.20% – 13.05%
Green Cars RoI
NA
New Cars RoI
9.05% – 10.20%
Old Cars RoI
12.20% – 13.05%
Green Cars RoI
NA
Bank of Maharashtra offers loans on new and used cars (not older than three years). The bank may lend up to 25 times of the monthly income of salaried individuals and two times of annual income for self-employed. The bank also offers top up loans to its existing customers. The bank also provides loans to individuals with credit scores below 600, though in higher interest rates. The bank does not take fees to process loans.
Extra Details
Eligibility: Minimum yearly income of salaried borrowers should be INR 2 lakh and INR 2.5 lakh for self-employed.
Processing fee: 0.25%.
Foreclosure and part-payment: 5% of the outstanding principal amount.
How to apply: Existing customers can login to the bank’s internet banking to get an online quotation on the price of select cars and application eligibility. Alternatively, visit the bank’s nearest branch to apply for a car loan by giving out details of the vehicle and the car dealer.
- Zero processing fees.
- Cars loan available for individuals with low credit scores.
- Top up loans available for existing borrowers
- Low interest rates.
- Customer care available via virtual assistant, whatsapp banking, email, SMS and helpline support.
- A need to verify if the car dealer is in the bank’s list.
- Loans not available for green cars
- There’s no benefit of a loan against a car.
- Information on other charges not available.
BEST FOR LOW MARGIN ON NEW CAR LOANS
Union Bank of India
New Cars RoI
8.80% – 10.55%
Old Cars RoI
12.65% – 12.75%
Green Cars RoI
8.75% – 10.50%
New Cars RoI
8.80% – 10.55%
Old Cars RoI
12.65% – 12.75%
Green Cars RoI
8.75% – 10.50%
Union Bank of India offers loans on new, used cars (not older than three years), and green cars. The bank may lend up to 90% of the on-road price of the new and green cars, and 60% on the older ones. Notably, the bank takes only a 10% margin of the loan amount on purchase of new 4-wheeler cars.
Extra Details
Eligibility: Salaried and self-employed individuals.
Processing fee: NA.
Foreclosure and part-payment: NA.
How to apply: Interested borrowers will have to visit the bank’s nearest branch to apply for a car loan by giving out details of the vehicle and the car dealer.
- Customer care available via virtual assistant, whatsapp banking, email, SMS and helpline support.
- A need to verify if the car dealer is in the bank’s list.
- Loans not available for used and green cars.
- Info on other charges not available.
BEST FOR ZERO CHARGES ON FORECLOSURE OF CAR LOANS
Bank of Baroda
New Cars RoI
8.40% – 11.85%
Old Cars RoI:
11.60% – 14.35%
Green Cars RoI
NA
New Cars RoI
8.40% – 11.85%
Old Cars RoI:
11.60% – 14.35%
Green Cars RoI
NA
Bank of Baroda offers loans on new and used cars (not older than three years). The bank may lend up to 90% of the on-road price of the new car, and up to 75% on the older ones. Notably, the bank does not take fees on pre closure of the car loan.
Extra Details
Eligibility: Salaried individuals – minimum annual income of INR 2.5 lakh; self-employed – INR 3 lakh.
Processing fee: Nil on purchase of new cars. 0.50% on old cars.
Foreclosure and part-payment: NA.
How to apply: Existing borrowers can login to their internet banking to apply for a car loan, or alternatively visit the bank’s nearest branch with details of select vehicle and the car dealer.
- Nil processing fee on purchase of new car.
- Customer care available via virtual assistant, whatsapp banking, email, SMS and helpline support.
- A need to verify if the car dealer is in the bank’s list.
- Loans not available for green cars
- There’s no benefit of a loan against a car.
- Information on other charges not available.
BEST FOR QUICK PROCESSING OF CAR LOANS
Dhanlaxmi Bank
New Cars RoI
10.55% – 13.95%
Old Cars RoI
12% – 15.40%
Green Cars RoI
NA
New Cars RoI
10.55% – 13.95%
Old Cars RoI
12% – 15.40%
Green Cars RoI
NA
Dhanlaxmi Bank’s new and old car loans in an RoI comparatively higher than other banks. The bank may lend up to 90% of the on-road price of the new car, and up to 60% on the older ones for a tenure starting six months till five to seven years.
Extra Details
Eligibility: Salaried – minimum annual income of INR 2.4 lakh to 2.5 lakh; self-employed – INR 2.4 lakh.
Processing fee: Need to call the bank for processing fee and other related charges.
Foreclosure and part-payment: NA.
How to apply: Borrowers can fill-up an online form with basic personal info and contact details for the bank’s agent to get back. Alternatively one may visit the bank’s nearest branch with details of the desired vehicle and the car dealer.
- Customer care available via virtual assistant, whatsapp banking, email, SMS and helpline support.
- Loans not available for green cars
- No benefit of loan against a car and top up loan.
- Information on processing fee and other charges not available.
Forbes Advisor India Ratings
The above interest rates and details on car loans are updated as on Jan. 25, 2023. While we update this information regularly, banks may have revised the RoI, or any details on the retail loan since the page was last updated.
Methodology
Product range and variables: Banks offering loans for new, old and green vehicles were given the top priority while selecting the best car loans in India. Different ways of obtaining loans, like loan against a car and top up loans, were also considered while rating the product.
Favorable interest rate: Financial institutions should offer competitive RoI on purchase of new, old and green cars.
Customer-centric: Banking institutions should provide comprehensive services for all financial needs of account holders. Ease of access to information on the website, mobile apps, phone call, or through presence of physical branch networks should correspond well to deposit holders.
Technology enablement: A bank should be equipped with end-to-end digitization to seamlessly process the consumers’ financial service.
Penalty and charges: Low to mid scoring has been given to all banks.
Customer support: Consumers should find it convenient to get in touch with the bank’s car loan customer care and get help to solve related queries via live agent chat online, virtual assistant, whatsapp, mobile app — besides call, email and sms support.
What is a Car Loan and How Does it Work?
Owning a car has become a necessity and a convenient mode of transport in today’s time. There’s a wide range of cars available in the market that suit all economic backgrounds from affordable cars to luxurious cars. Even with the variety, not everyone can afford purchasing a car by making a lump sum down payment. Here’s where car loans come to the rescue.
Applying for a car loan is super easy and paperless. You can make an online application request with just a few clicks and submit your application. Nearly all banks offer car loans with appealing interest rates. It is effortless to take a car loan and then pay equated monthly installments (EMIs) depending on a person’s affordability.
Interest Rates
Interest rates on car loans offered by the banks are very competitive. If a certain bank offers 8.99% p.a. it becomes a challenge for other banks so they might offer 8.60% p.a. or go even less. The interest rate is not the same for all the buyers. The loan interest depends on the financial factors of the borrower. The borrower should analyze the interest rate offered by various banks and accordingly make a decision.
Features of a Car Loan
- Get financial support for purchasing a car.
- You can get up to 85% to 90% financing on the on-road price of the car.
- To certain conditions, few banks even offer up to 100% financing on the on-road price of the vehicle.
- The loan period can go from one year to seven years.
- The financing amount can be up to three times the annual earnings of the applicant.
- Some banks even offer instant finance facilities.
- If the car dealer and the bank have a tie-up, the bank may offer additional offers and discounts.
- The car will be held as collateral until the loan is repaid.
- The repayment is done mostly through an EMI.
Car Loans Offered in India
For a new car
Loan for a new car is financed up to 85% of the total value by the bank. The buyers can take advantage of this type of car loan either before purchasing a car or after depending on the bank’s discretion. The car is pledged as security until the loan amount is repaid with the tenure. The bank has the authority to repossess the car in case of defaults in paying the EMI.
For a used car
Used cars refer to cars that are pre-owned by one or multiple users for a definite period of time. Lenders offer loans for used cars that are not more than three years old. The amount is comparatively low because cars tend to lose their value with every course of time. Banks offer loans from 50% to 80% of the existing value of the car. The loan can go up to 90% in certain cases.
For against a car
In this type of loan banks provide money against the borrower’s car to meet their financial needs. The borrower can get up to 50% to 80% of the existing value of the vehicle. The vehicle is taken as security and released once the amount is repaid within time.
How to Calculate Car Loan EMI?
Lending institutions provide car loans and charge fixed or floating rate on interest on the equated monthly installment (EMI), either after down payment or full financing of the on-road price, to salaried and self-employed individuals as well as business firms.
EMI on car loans also vary upon lending institutions, loan amount, repayment tenure, borrower’s credit profile as well as aspirants’ select car model and brands, to name a few.
For example, If you’re applying for a new car loan for INR 10 lakh and the bank is charging an interest of 10.5% for a tenure up to 10 years, then the formula of simple interest will be used to calculate the interest on that sum to calculate your monthly EMI.
The procedure is as follows:
E = P X R X (1+R)N/(1+R)N–1)
Where, E = EMI; P = Principal amount; R = Rate of interest; N = Tenure in months.
EMI = INR 10,00,000 X 0.00875 X (1 + 0.00875)120 / (1 + 0.00875)120 – 1) = INR 13,493.
This aspect of calculating floating rate of interest will help you calculate your EMI before you choose to take a car loan. Nonetheless, banks usually provide the breakdown of EMI against the outstanding amount in your car loan sanction letter.
Eligibility Criteria for Applying a Car Loan
There are certain eligibility criteria for applying for a car loan. Buyers must have an understanding of it. The factors that describes your eligibility are:
- The age should be between 21 to 60 years for salaried and 18 to 65 years for self employed.
- The annual income should be INR 25,000 for salaried and minimum turnover should be INR 40 lakh for self employed.
- The credit score should be 700 for both salaried and self employed buyers.
- The loan tenure is up to seven years and loan to value ratio is up to 100% for salaried as well as self employed customers.
Application Process for a Car Loan
Applying for a car loan is easy and can be done effortlessly online. From applying for loan to the approval, the entire process is digitalized. The following steps will guide you through the process.
Step 1: Fill up the application form of the desired bank by providing personal details and required credentials.
Step 2: Submit the required documents mandated by the bank by uploading them for verification.
Step 3: Once the documents are verified the bank will approve the loan within a short period of two days.
Step 4: The bank provides a specific percentage of the amount that the customer has invested in buying the car.
Documents Required for Car Loan
Here are the list of documents required for the purpose, as follows:
Proof of income, identity, and address required for salaried
- Last six months’ bank account statement
- Two passport size photographs.
- Salary slip of at least three months.
- Income tax return or Form 16 for the last two years.
- Pan card, voter’s card, aadhar card, driving license, etc.
- Ration card, driving license, telephone bill, electricity bill, life insurance policy.
Proof of income, identity, and address required for self employed
- Last six months’ bank account statement.
- Two passport size photographs.
- Income tax return of last two years.
- Proof of income: Audited Balance sheet, profit and loss statement for two years, shop and establishment act certificate, sales tax certificate, SSI registered certificate, copy of partnership.
Factors that Can Affect Your Car Loan
There are a few factors that can affect buyers and they should be aware of them before applying for a car loan.
Credit Score
A credit score is one of the major factors that can affect your car loan. The lenders get a complete understanding of your creditworthiness based on your score. The bank or the financial institution will lend you the amount after enquiring about your credit score and report.
Debt-to-income (DTI) ratio
The bank or financial institution will assess your income and see whether you can cater to a new car loan and if the EMI fits your budget. They examine it through the DTI ratio. If the buyer has a high DTI score the lender will give you a lower amount no matter what your income is.
Down Payment
Down payment is the amount of money or percentage you pay on the on-road price of the car. A car loan comes with a defined margin. There are some banks that can finance up to 100% under loan schemes. It is wise to save for a down payment because if you borrow less, you pay less interest to the bank. It also reduces the total cost of car ownership.
Age of Car
The age of the car is a major deciding factor to approve or reject a car loan. Age matters only when the customer wants to purchase a used car. It also matters a lot to decide on a certain rate of interest.
Bottom Line
Owning a car is a status symbol, comforting and a valuable mode of transport. Applying for a car loan is relaxed and can be done anywhere and anytime online. Buyers need to have a few documents ready before applying for a car loan.
Forbes Advisor adheres to strict editorial integrity standards. To the best of our knowledge, all content is accurate as of the date posted, though offers contained herein may no longer be available. The opinions expressed are the author’s alone and have not been provided, approved, or otherwise endorsed by our partners.
