World Connect News
Ground Report (Special Correspondent, New Delhi):
If you’re planning to buy a new car this festive season, taking a look at banks’ car loan offers and interest rates could prove extremely beneficial. As of September 2026, interest rates for new cars from major public and private banks in the country start at 7.45% per annum .
Even a small difference in interest rates across banks can have a big impact on your long-term EMI and total interest payout.
Car Loan Rates and EMIs from Top Banks (September 2026)
Below is a comparison of starting car loan interest rates and estimated EMIs for a loan of ₹1 lakh for a tenure of 7 years (84 months) from the top public and private sector banks :
| Bank Name | Starting interest rate (Interest Rate pa) | 7-year EMI starting at ₹1 lakh |
| Canara Bank | Starting at 7.45% | ₹1,531 |
| Union Bank of India | Starting at 7.50% | ₹1,534 |
| Punjab National Bank (PNB) | Starting from 7.60% (Floating) | ₹1,539 |
| Bank of Baroda (BOB) | Starting from 7.60% (Floating) | ₹1,539 |
| HDFC Bank | Starting at 8.15% | ₹1,569 |
| ICICI Bank | Starting at 8.35% | ₹1,576 |
| State Bank of India (SBI) | Starting at 8.80% | ₹1,599 |
| Axis Bank | Starting at 8.95% | ₹1,606 |
| Kotak Mahindra Bank | Starting at 9.00% | ₹1,609 |
(Source: BankBazaar data/Bank Reports, September 2026)
Government Banks vs. Private Banks: Where Will You Get More Benefits?
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Public Sector Banks:
Public sector banks like Canara Bank (7.45%), Union Bank of India (7.50%) and Punjab National Bank (7.60%) are currently offering the cheapest interest rates in the market. However, the starting rate of State Bank of India (SBI) is recorded at 8.80%.
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Private Sector Banks:
Among private banks, HDFC Bank is offering car loans at 8.15% and ICICI Bank at 8.35%.Even though their starting rates are slightly higher than public banks, fast-track approval, minimal documentation and pre-approved car loan facility for existing account holders make private banks quite popular.
4 essential tips to get the lowest interest rate
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CIBIL/Credit Score (750+): The lowest rates from banks are available only to customers who have a credit score of 750 or more.
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Increase down payment: Taking a loan (LTV Ratio) of less than 80-90% of the on-road price of the vehicle allows banks to offer better interest rates due to lower risk.
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Electric Vehicle (EV) Discount: Many banks offer additional interest discount ranging from 0.05% to 0.25% on electric four-wheelers under ‘Green Car Loan’.
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Check processing fees: Apart from the interest rate, also compare the one-time processing fees and foreclosure charges levied by banks.
