Thinking of buying a new car? Well, that’s a dream for many of us. But let’s face it, cars don’t come cheap these days. Whether you are planning to buy a small hatchback, a stylish sedan, or a big SUV, arranging money can be a big hurdle. That’s where a good car loan can really help. But which is the best car loan bank in India? And how do you compare car loan interest rates to make the right choice?

In this blog, we will walk you through everything you need to know about choosing the right bank for your car loan. From interest rates and EMI options to online tools like the car loan EMI calculator, we will cover it all in a simple, easy-to-understand way.

Why Compare Car Loan Options?

When you are buying a car on loan, it’s not just about how much EMI you will pay. The car loan interest rate also plays a huge role. Even a small difference in interest rate can make a big impact on your total repayment amount over the years.

For example, if one bank offers a 7% interest rate and another offers 8.5%, the extra money you will end up paying can be in thousands, or even lakhs, depending on the loan amount and tenure. So, it’s always a smart idea to compare car loan rates before choosing the lender. The best platform to compare loans is BigMudra, you can compare loans from different banks and NBFCs that exist currently. 

Things to Check Before Choosing a Car Loan

Here are a few things you must keep in mind before applying for a car loan:

1. Interest Rate: This is the main factor. Always go for a bank that offers the lowest car loan interest rate without too many hidden conditions.

2. Processing Fees: Some banks charge high processing fees which can increase your overall cost. Check this before finalising.

3. Prepayment Charges: If you plan to repay the loan early, check if there are any charges for that.

4. Loan Tenure: Longer tenures reduce the EMI but increase the interest you pay overall. So, balance it well.

5. Loan-to-Value Ratio (LTV): This tells how much of the car’s price the bank will finance. Most banks offer 85% to 100% financing.

Top Banks for Car Loans in India (2025)

Here’s a list of some popular and reliable banks that offer car loans with competitive interest rates:

1. HDFC Bank

• Interest Rate: Starting from 8.50% p.a.
• Loan Tenure: Up to 7 years
• Benefits: Quick approval, minimal paperwork

HDFC is often considered the best car loan bank by many, especially because of its fast processing and wide reach.

2. State Bank of India (SBI)

• Interest Rate: Starting from 8.65% p.a.
• Loan Tenure: Up to 7 years
• Benefits: Low processing fees, special offers for government employees

SBI is a trusted name and offers flexible options for salaried and self-employed individuals.

3. ICICI Bank

• Interest Rate: Starting from 8.75% p.a.
• Loan Tenure: Up to 7 years
• Benefits: Online tracking, fast disbursal

ICICI also offers attractive deals to existing customers.

4. Axis Bank

• Interest Rate: Starting from 8.70% p.a.
• Loan Tenure: Up to 7 years
• Benefits: Flexible EMI options, online approval

Axis Bank’s online car loan calculator makes it easy to check EMI based on different loan amounts and interest rates.

5. Kotak Mahindra Bank

• Interest Rate: Starting from 8.60% p.a.
• Loan Tenure: Up to 7 years
• Benefits: Up to 100% financing on selected models

If you are looking for the lowest car loan interest rate, Kotak is a great option to explore.

6. Bank of Baroda

• Interest Rate: Starting from 8.70% p.a.
• Loan Tenure: Up to 7 years
• Benefits: No prepayment charges, government schemes available

A good option for those who want a public sector bank experience with digital services.

Read More: Which Bank Has the Lowest Personal Loan Interest Rate in 2025?

Car Loan EMI Calculator: Your Best Friend

If you are not sure how much EMI you will need to pay, don’t worry. You can easily calculate your car loan EMI with BigMudra EMI calculator. These tools are super simple and very helpful.

Just enter the following:

• Loan amount
• Interest rate
• Loan tenure (in months or years)

And boom! You will instantly see your monthly EMI. You can also play around with the numbers to see what suits your budget best.

Whether you are a salaried employee or a business owner, using a car loan calculator before taking a loan helps you stay financially prepared.

Fixed vs Floating Interest Rate – Which is Better?

When looking at car loan interest rates, you will see two types:

• Fixed Interest Rate: Stays the same throughout your loan term.
• Floating Interest Rate: Can change based on market conditions.

Most car loans in India come with fixed interest rates. This makes EMI planning easier, especially if you are someone who likes stable and predictable payments.

However, if market rates fall, you might miss out on lower EMIs with a fixed plan. So, consider your risk appetite before deciding.

Tips to Get the Best Car Loan Deal

Here are some simple but effective tips to get the best car loan:

1. Check Your Credit Score: A good credit score (above 750) can help you get the lowest car loan interest rate from top banks.

2. Compare Offers: Don’t just walk into your nearest bank. Use online platforms to compare car loan rates from multiple banks.

3. Negotiate: Yes, you can negotiate interest rates and processing fees, especially if you have a good relationship with the bank or are an existing customer.

4. Go for Pre-approved Loans: Sometimes, banks offer pre-approved car loans to selected customers with good credit. These usually have lower interest and faster disbursal.

What About NBFCs?

Non-Banking Financial Companies (NBFCs) like Tata Capital, Bajaj Finserv, and Mahindra Finance also offer attractive car loans. Their car loan interest rate might be slightly higher, but they are more flexible in terms of documentation and credit history.

If you don’t qualify for a bank loan, NBFCs can be a good alternative.

Documentation Required for Car Loan

Usually, banks ask for the following documents:

• Identity Proof (Aadhaar, PAN, Passport)
• Address Proof
• Income Proof (Salary slips or ITR)
• Bank Statements
• Car quotation from dealer

Make sure your documents are ready to avoid delays.

Final Thoughts: Choose What Works for You

At the end of the day, the best car loan bank depends on your personal situation: your credit score, job stability, income, and loan amount.

If you want stability and trust, banks like SBI or HDFC are great. If you are looking for faster service and flexibility, private banks or NBFCs might suit you better.

But always remember to use tools like a car loan EMI calculator and compare all car loan interest rates before signing the dotted line.