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Interest Rates

Vehicle Loan Interest Rate: Car, EV, Used Car and Two-Wheeler

Bank vehicle loan rates start near 7.45% for new cars, 7.50% for EVs, 9.45% for used cars and 10.10% for two-wheelers (17 Sep 2026).

PS

Written by Priya Sharma

Updated on 17 September 2026·6 min read

On this page8 sections
Credsir Interest Rates guide cover with a percent icon

Vehicle loan interest rates at Indian banks start at about 7.45% a year for a new car, 7.50% for an electric car, 9.45% for a used car and 10.10% for a two-wheeler, based on bank rate cards checked on 17 September 2026. Your credit score, the type of vehicle and whether the rate is fixed or floating decide where you land.

Vehicle loan interest rate: key facts

Item Position on 17 September 2026
Lowest new car rate found 7.45% floating, Bank of Maharashtra, salaried, CIBIL 800 or more
Lowest electric car rate found 7.50% floating, Union Bank of India, CIBIL 800 or more
Lowest used car rate found 9.45% floating, PNB, CIBIL 750 or more
Two-wheeler rates 10.10% to 15.70% at the banks checked
Fixed-rate car loans SBI 8.40% to 9.35%; Axis Bank 8.90% to 11.70%
RBI repo rate 5.25%; next policy meeting 5–7 October 2026
Prepayment charge, floating-rate loan to an individual Nil

Vehicle loan interest rates by vehicle type

Each row shows the lowest and highest published rate at the banks we checked. For the full bank-by-bank new car table, see our car loan interest rates page.

Vehicle Bank rates found Rate type
New car Bank of Maharashtra 7.45% to 11.75%; Union Bank 7.60% to 10.00%; Bank of Baroda 7.60% to 11.30%; PNB 7.65% to 9.70%; SBI 8.40% to 9.35%; Axis Bank 8.90% to 11.70%; HDFC Bank from 9% Floating at the public sector banks except SBI; fixed at SBI and Axis Bank
Electric car Union Bank 7.50% to 9.90%; PNB 7.60% to 9.65%; Canara Bank from 7.80% on loans up to ₹15 lakh; SBI Green Car Loan 8.30% to 9.35% Floating, except SBI
Used car PNB 9.45% to 10.55%; SBI 10.45% to 15.60%; Bank of Baroda 10.65% to 13.40%; Bank of Maharashtra 11.20% to 14.05%; Union Bank 11.60% to 11.70% Floating, except SBI
Two-wheeler Canara Bank from 10.10%; Union Bank 11.10% to 11.20%; SBI 11.70% to 15.70%; Bank of Baroda 12.40% Floating, except SBI

Union Bank’s used car rate is for cars no more than three years old. SBI takes 0.50 percentage point off its two-wheeler rate for an electric two-wheeler, and Union Bank charges 10.90% to 11.00% on one. For second-hand cars in detail, read our guide to used car loan interest rates.

Fixed or floating: how car loan rates work

Most public sector banks now price car loans as floating rates linked to the RBI repo rate. SBI and Axis Bank lend at fixed rates instead.

  • Floating rate. Union Bank adds or subtracts a spread from its external benchmark rate of 8.00%. PNB, Canara Bank and Bank of Maharashtra use a repo-linked lending rate. If the RBI changes the repo rate, your rate moves at the next reset.
  • Fixed rate. SBI prices car loans off its 3-month MCLR of 8.25%, and the rate at disbursement stays for the whole loan. Axis Bank’s fixed rate, based on its 1-year MCLR of 8.90%, has no reset.

At banks that offer both, fixed costs more today. PNB charges 7.65% floating or 8.65% fixed on a new car for a borrower with a score of 750 or more. Bank of Maharashtra’s fixed new car rate starts at 10.15%, against its floating floor of 7.45%.

Union Bank lets vehicle loan borrowers switch from floating to fixed once, after paying at least 12 EMIs. The fixed rate is 1 percentage point above the floating rate, and the switch costs ₹10,000 + GST on loans up to ₹50 lakh.

How your credit score changes the rate

Banks set the spread by credit score. Union Bank’s new car card for salaried borrowers shows how wide the gap is:

CIBIL score (Union Bank) New car rate Electric car rate
800 and above 7.60% 7.50%
776 to 799 7.75% 7.65%
750 to 775 7.80% 7.70%
700 to 749 8.20% 8.10%
680 to 699 8.75% 8.65%
650 to 679 9.50% 9.40%
Below 650 10.00% 9.90%

SBI’s fixed rates run from 8.40% for a score of 800 or more to 9.35% for 650–699 on loans above five years. At Union Bank and Bank of Maharashtra, non-salaried borrowers with good scores pay 0.05 to 0.20 percentage point more.

What the rate does to your EMI

On an ₹8 lakh car loan over 5 years:

Rate Monthly EMI Total interest
7.45% ₹16,011 ₹1,60,681
7.60% ₹16,068 ₹1,64,104
8.40% ₹16,375 ₹1,82,482
9.00% ₹16,607 ₹1,96,401
11.70% ₹17,675 ₹2,60,471

Watch for rates quoted as “flat”. A flat 5% on ₹8 lakh for 5 years charges ₹2,00,000 of interest on the full amount, an EMI of about ₹16,667. That works out to roughly 9.15% on the reducing balance that banks use. Ask for the reducing-balance rate or the annual percentage rate in the Key Fact Statement, and check it with the EMI calculator.

Car loan transfer: moving to a lower rate

You can move an existing car loan to another lender, which pays off the old loan. Whether it saves money depends mostly on the exit charge.

  1. Check your sanction letter to see whether your rate is fixed or floating.
  2. If it is floating and you took it as an individual for personal use, your bank cannot charge a prepayment fee.
  3. If it is fixed, find the foreclosure charge. HDFC Bank charges 5% of the principal outstanding on car loans taken from 1 December 2025, and Axis Bank charges 5%. Kotak Mahindra Prime charges 5.21% in the first half of the tenure and 3% after that on loans sanctioned from 1 April 2026.
  4. Get a written offer from the new lender with its rate, processing fee and stamp duty.
  5. Compare the interest you would save with the exit charge plus the new fees. On ₹6 lakh outstanding, a 5% charge is ₹30,000 plus GST.
  6. Collect the no-dues certificate and get the lender’s hypothecation on your registration certificate changed.

Kotak says it offers refinance on the same vehicle after a set part of the tenure.

Frequently asked questions

What is the current car loan interest rate?

New car rates at the banks checked start at 7.45% to 9% a year and reach 11.75% for weaker profiles, as of 17 September 2026. Electric cars start at 7.50%.

Are car loan interest rates floating or fixed?

Both. Bank of Baroda, PNB, Union Bank, Canara Bank and Bank of Maharashtra offer floating repo-linked rates. SBI and Axis Bank lend at fixed rates.

What is the car loan interest percentage for a two-wheeler?

From 10.10% at Canara Bank to 15.70% at the top of SBI’s range. Electric two-wheelers get a small discount at SBI and Union Bank.

Can I transfer my car loan to another bank for a lower rate?

Yes. A floating-rate loan taken for personal use has no prepayment charge. Fixed-rate loans usually carry a foreclosure charge, often 5% of the outstanding principal.

Why is a used car loan more expensive?

Lenders see more risk in an older car and lend for shorter terms. The lowest used car rate found was 9.45% at PNB, against 7.45% for a new car.

Will car loan rates change after the RBI’s October 2026 meeting?

Floating-rate loans follow the repo rate at their next reset. The RBI’s next decision is due at its 5–7 October meeting, and fixed-rate loans will not change.

Sources

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