Buying a car in India is often considered as one of the most significant life decisions, after purchasing a home. With the rise of cutting-edge technologies, prospective buyers are increasingly seeking luxurious, technologically advanced vehicles at the most competitive prices. Despite the high cost of vehicle ownership, car loans have made this investment much more affordable. Today, nearly all leading Indian banks offer car loans at attractive interest rates. The car loan approval process has also become streamlined and hassle-free. If you're planning to invest in a car soon, here's a list of the best banks for car loans in India.

Top 10 Banks for Car Loans in India 2025

Most car buyers finance their purchase with a loan. Getting a car is easier now because auto loans have low interest rates. Here is a list of the best banks for car loans.

• State Bank of India
• HDFC Bank
• ICICI Bank
• Punjab National Bank
• Axis Bank
• Bank of Baroda
• Kotak Mahindra Bank
• Canara Bank
• Union Bank of India
• IDFC First Bank

1. State Bank of India

State Bank of India is one of the largest lenders in the country, and they offer best car loans at reasonable interest rates. Corporate/Wholesale Banking, Retail Banking and Insurance Business are some of the segments of the company. SBI often offers additional benefits, such as reduced processing fees or a waiver, making it an attractive option for car buyers. SBI lets you pay for longer and pay earlier without any extra fees. It is, therefore, often a top choice for new car buyers.

SBI offers car loans in four variants:

The SBI New Car Loan Scheme

The SBI Loyalty Car Loan Scheme

The SBI Assured Car Loan Scheme

The SBI Green Car Loan

Features of SBI Bank

• Low processing fee, flexible EMI options, and easy documentation.
• SBI offers an overdraft facility for its car loan.
• Financing on the on-road price includes registration and insurance.
• The interest is calculated on the daily reduction balance.
• No charges for prepayment.
• After two years, no foreclosure charges.
• Financing up to 100% of the actual road price.
• There is no advance EMI.
• Optional SBI life insurance protection is available.

2. HDFC Bank

If you are planning to buy a new car to enhance your lifestyle then HDFC is the best bank for car loan financing. Get the car loans at low interest rates from HDFC Bank. Flexible payment plans and quick approvals make it easy to get behind the wheel of your dream car.

Features of HDFC Bank

• Up to 100% financing on your new car is only available for a few car models.
• The loan can be repaid in flexible repayment terms ranging from 12 months up to 84 months.
• The quantum of the car loan can be up to 6 times the annual income of the borrowers.
• A car loan from HDFC is approved in 30 minutes.
• Flexible EMI repayment options are available for every type of HDFC Bank car loan.
• Unique schemes are available for existing HDFC bank customers.
• Car loans up to Rs. 1.5 Cr.

3. ICICI Bank

If you're planning to buy a new car and looking for the best car loan in India. ICICI Bank is one of the leading options when it comes to new and pre-owned car loans. Additionally, the bank offers competitive interest rates and flexible repayment options, making it easier for you to drive home your dream vehicle without financial stress.

Features for ICICI Bank

• 100% of the road price can be obtained as a loan.
• Flexible repayment terms of up to 84 months are possible with easy EMI options.
• Digital sanction instant digital.
• Get quick approval by applying online.
• You can get a quick vehicle loan of up to 80% on used cars.
• Pre-approved and pre-qualified for car loans for existing customers.
• Easy and simple documentation process and online loan tracking.

4. Punjab National Bank

If you're looking for the best bank for car loans in India, Punjab National Bank is a key player. The bank's car loans are among its most popular products, with affordable interest rates and flexible repayment terms. This ensures that customers are not overwhelmed by EMI payments.

Features of Punjab National Bank

• Financing up to 100% of the Ex-showroom price.
• The repayment period can be up to 120 months for electric vehicles and up to 84 months for non-electric vehicles.
• The minimum salary or pension amount for the applicant must be Rs.25,000.
• Bank offers both fixed and floating interest rates are offered on the car loan.
• Low processing fees, quick processing, and no prepayment charges.
• Punjab National Bank has partnered with well-known car manufacturers like Tata Motors, Honda Cars India, Force Motors Limited, Maruti Suzuki India, and Mahindra and Mahindra.
• You need to provide collateral, security, or a third-party guarantee, depending on your financial situation.
• The margin on the loan is up to 15% of the on-road price for new cars and up to 25% for pre-owned cars.

5. Axis Bank

Axis Bank, the third-largest private sector bank is a household name for auto financing. It is the best bank for car loans, which offers a diverse range of customised programs to cater to the different needs of people around the country. The bank's adaptable, transparent, and economical lending approach has placed it among the top five auto financing firms in the country.

Features of Axis Bank

• The minimal loan amount that is available is Rs 1 lakh.
• Get up to 100% on-road price financing.
• Pick a repayment period of up to 7 years for new cars and 5 years for repossessed ones.
• Customers with pay accounts with Axis Bank are exempt from providing income documentation or bank statements.
• For utilised vehicles, it is possible to receive funding of up to 85% of the appraised value.
• You are eligible to receive up to 150% of the original loan amount through a balance transfer or top-up loan.
• The auto loan amount is generally calculated based on the vehicle's ex-showroom price.
• Priority Banking, Wealth Banking and Private Banking customers receive additional privileges.
• You can get your dream car and get a guaranteed buyback of up to 67% of its value with a Smart Buyback auto loan.

6. Bank of Baroda

The Bank of Baroda is India's second-largest bank and the best bank for car loans in India. Vehicle loan deals are customised to suit individual requirements. Factors like the type of vehicle, down payment, repayment tenure, and borrower profile are all considered to create the ideal loan package for you. The loan term can vary based on the borrower's financial standing and preferences. Additionally, Bank of Baroda's car loan interest rates remain competitive, making it a preferred choice for vehicle financing.

Features Of Bank of Baroda

• The on-road price of the car can be financed up to 100%.
• The maximum amount of loan you can get is Rs.5 crore.
• The interest rates are based on the applicant's credit score and are calculated on the daily reducing balance.
• There is a maximum repayment tenure of 84 months for the car loan.
• Corporate workers, non-resident Indians, professionals, and entrepreneurs can apply for a car loan.
• Bank of Baroda will hypothesise the car that is being financed.
• There is no penalty associated with the pre-closure of auto loans.

7. Kotak Mahindra Bank

Kotak Mahindra Bank is the best bank for car loans in India, offering interest rates based on factors such as loan amount, repayment tenure, and credit score. Customers can apply for car loans to purchase either a new or pre-owned vehicle, with flexible financing options tailored to individual needs.

Features of Kotak Mahindra Bank

• Get the Car loans at low interest rates.
• Flexible repayment options with loan tenures from 12 to 84 months.
• Fast approval and disbursement of loans within a few days of approval.
• Minimal documentation for a hassle-free application process.
• Loan amounts starting at Rs.75,000.
• Allows borrowers to transfer existing car loan balances to Kotak Mahindra Bank with attractive rates.
• Refinance option available after a specific tenure on the same vehicle.
• Convenient online application process.

8. Canara Bank

Canara Bank is one of the leading banks in India that offers a range of services to its consumers. You can get the best car loan in India from Canara Bank. It helps people purchase their dream car without financial burden. The bank offers competitive interest rates and flexible repayment options to ensure that you are able to afford the loan.

Features of Canara Bank

• It offers flexible repayment options, allowing you to choose a convenient loan tenure.
• There are no prepayment charges, so you can make partial or full prepayments without extra fees.
• Guarantees quick loan processing with a hassle-free application and fast approval.
• Requires minimal documentation, which will make it easy to apply for a car loan.
• It will finance up to 90% of the car's on-road price, including all taxes and charges.
• A new car costing up to Rs. 10 lakhs, above Rs. 10 lakhs, and up to 25 lakhs, above Rs. 25 lakhs will require you to fork out 10%, 15%, and 20% of the loan amount.
• The Canara Bank car loan is available to individuals, professionals, firms, etc., except for Hindu undivided families.

9. Union Bank of India

The Union Bank of India is recognized as one of the largest government-owned banks in India. The bank provides the best car loans for individuals facing challenges in managing their finances. If you have a good CIBIL score and meet the eligibility criteria, you can secure a vehicle loan from Union Bank of India at competitive interest rates.

Features of Union Bank of India

• The bank provides financial assistance for the purchase of a new or used vehicle.
• Candidates who have a CIBIL score of 700 or higher are not required to provide a guarantee.
• A bank can offer financing for up to 85% of the on-road price of a new car.
• You can obtain a car loan with a repayment term of up to seven years.
• Car loans are available with best interest rates.
• Salaried applicants who have a salary account with Union Bank of India can receive a 5% margin discount.
• Flexible EMIs, low processing fees, and special rates for salaried individuals.

10. IDFC First Bank

IDFC First Bank is considered one of the best banks for car loans in India. Formerly known as IDFC Bank, this private bank is owned by IDFC, a company specialising in infrastructure finance. IDFC First Bank has served both corporate and individual customers. The bank is also committed to helping people in rural areas and self-employed individuals. IDFC First Bank was the first bank in India to provide a cashless payment solution linked to Aadhaar, strengthening its reputation for innovation.

Features of IDFC First Bank

• The duration of the car loan's repayment can extend up to 10 years.
• The rate of interest commences at 9.60% per annum.
• One can make an online application for a car loan.
• Car loans are available with fixed as well as floating interest rates.
• Get quick approval with minimal documentation

Factors To Consider When Availing The Best Car Loan

While availing best car loan in India, it is important to keep a check on the following factors:

• You should make sure you are taking out a loan for the right car. You should ask your bank or financial institution for help if you're unsure which loan would be adequate for the make and model of the car you've picked, so they can help you pick the right one.
• You should know how much a bank loan costs for a car. Understanding the loan approval process, the applicable interest rate and any additional costs are important. Before you sign up for the deal, it is important to know these things because they could affect your decision to take out this loan with them.
• Check out the terms and conditions of your bank or other financial institution before you apply for a loan. Either online or by contacting the bank.
• You should also make sure that your credit history is clean and your credit score is high.

Here is a comparison between the best bank for car loan in India, which can help you to choose the best bank for your car loan.

Eligibility for best car loans in India

In addition to meeting the eligibility requirements and submitting the necessary paperwork for a car loan, you must also pay a down payment on the vehicle, up to a predetermined percentage depending on your loan eligibility. If you do not meet the bank's requirements, you may be required to provide additional information about your guarantee.

What are the documents required for a car loan application?

The most common documents needed by banks to process a car loan are:

• Duly filled Application Form
• KYC Documents
• Recent Photographs
• Identity Proof (e.g., Aadhar, Passport, etc.)
• Address Proof (e.g., Utility bill, Driving licence, etc.)
• Bank Statements (the last 6 months)
• Income Proof
• Latest Salary Slip or Form 16
• Income Tax Returns of the previous 2 financial years, including financial/audit reports
• Business Stability Proof / Ownership Proof (for self-employed)
• Employment Stability Proof (for salaried individuals)
• Partnership Deed and letter signed by all partners authorising one partner (for partnerships)
• Resolution by Board of Directors (or managing body, for companies and societies)
• Memorandum and Articles of Association (for companies and societies)

Conclusion

Many Indian banks provide competitive car loan rates and flexible repayment options. Apart from major banks like SBI, ICICI, Axis, and HDFC, other banks such as Federal Bank, IDBI, Karnataka Bank, and Indian Overseas Bank also provide good loan schemes. To find the best bank for car loan, consider factors such as interest rates, fees, and repayment terms. Some banks offer concessions to the women borrowers by waiving off the processing fee. Creditkaro can help you save money on car loans, and figuring out your EMIs in advance can help you plan your finances better.