If you are planning to bring a shiny new car home this June or during the upcoming monsoon season, there is absolutely no need to be disappointed by the Reserve Bank (RBI)'s decision! While the RBI did not change the repo rate during its MPC meeting—meaning your loan EMIs won't be dropping anytime soon—that certainly doesn't mean you can't get an affordable car loan.

In fact, several banks are currently offering loans of up to ₹5 lakh at attractive rates. Let’s take a look at which banks are offering low interest rates on car loans.

Who is offering affordable loans?
Car loan interest rates vary across banks depending on their specific policies and your CIBIL score. While many banks advertise low starting rates, their upper-limit rates can be quite high; if your CIBIL score isn't good, the bank may offer you a loan based on its higher rate tier rather than the advertised starting rate. Bank Name    Interest Rate (%)    Estimated EMI    Processing Fee
UCO Bank    7.35 - 10.00    9,983 - 10,624    0.5% (Max. ₹5,000)
Canara Bank    7.45 - 11.45    10,007 - 10,984    50% discount on 0.25% (₹1,000 - ₹5,000)
Bank of Maharashtra*    7.45 - 11.75    10,007 - 11,059    0.25% (₹1,000 - ₹15,000)
Union Bank of India    7.50 - 10.00    10,019 - 10,684    Up to ₹1,000
Punjab & Sind Bank**    7.50 - 14.00    10,019 - 11,634    0.25% (₹1,000 - ₹15,000)
Indian Bank    7.50 - 9.65    10,019 - 10,513    ₹1,200
Indian Overseas Bank    7.55 - 12.00    10,031 - 11,122    Nil
Punjab National Bank    7.60 - 10.70    10,043 - 10,797    Up to 0.25% (₹1,000 - ₹1,500)
Bank of Baroda    7.60 - 11.35    10,043 - 10,959    Up to ₹2,000
Bank of India    7.60 - 12.55    10,043 - 11,262    0.25% ...up to (₹2,500 - ₹10,000)
Federal Bank    7.60 - 9.00    Starts at 10,198    0.50% (₹2,000 - ₹20,000)
Central Bank of India    7.60 - 9.30    10,043 - 10,452    1% (₹1,000 - ₹50,000)
Looking at the data, UCO Bank is currently leading the pack, with car loans starting at just 7.35%. It is followed by Canara Bank and Bank of Maharashtra, both offering loans at a starting rate of 7.45%.

If you consider the top end of the range (maximum interest rate), Federal Bank and Central Bank of India have relatively low upper caps (9.00% and 9.30%, respectively). This means that even if your CIBIL score is merely average, there is little risk of ending up with an exorbitantly expensive loan here.

Banks typically offer the lowest interest rates (such as 7.35% or 7.45%) to customers with CIBIL scores above 750–800. If you have a good credit score, you can negotiate with the bank to secure a car loan at the most competitive rate. Before finalizing the loan, be sure to inquire about processing fees and hidden charges to avoid any unpleasant surprises later on.

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