Overview
- Festive Financing Boost: Car loan rates in India for Diwali 2025 range from 7.60% to 14.25%, with banks offering competitive deals amid tax cuts and record auto sales.
- Top Lenders’ Offers: Union Bank of India, UCO Bank, and Indian Bank provide rates as low as 7.60–7.80%, with EMIs starting at Rs 10,043 for a Rs 5 lakh loan over 5 years.
- Festive Concessions: Union Bank, Bank of Maharashtra, and Central Bank of India waive processing fees, while Punjab and Sind Bank offer up to 50% fee discounts.
- Tax Cuts Drive Demand: Reduced GST on cars has lowered prices, boosting bookings for brands like Maruti Suzuki and Hyundai, fueling lender competition.
- EMI and Cost Variations: For a Rs 5 lakh loan, EMIs range from Rs 10,043 to Rs 11,699, depending on the lender and borrower profile.
- Choosing Wisely: Experts advise evaluating processing fees, EMI affordability, prepayment penalties, and total loan costs beyond just interest rates.
- Rising Auto Sales: Strong consumer sentiment and festive demand have spurred record vehicle bookings, encouraging banks to roll out attractive loan schemes.
Festive Season Fuels Car Loan Rates in India
New Delhi, October 12, 2025 – With Diwali 2025 approaching, car buyers in India are in for a treat as banks roll out competitive car loan rates, ranging from 7.60% to over 14% per annum, spurred by tax cuts and booming automobile sales. This festive season, reduced Goods and Services Tax (GST) on cars has lowered on-road prices, driving strong demand and prompting lenders to offer attractive financing options to capture the market.
According to data from Paisabazaar.com, for a Rs 5 lakh car loan with a 5-year tenure, monthly EMIs range from Rs 10,043 to Rs 11,699, depending on the lender and borrower’s credit profile. The combination of lower taxes, festive enthusiasm, and record bookings reported by automakers like Maruti Suzuki and Hyundai has created a perfect storm for car loan affordability.
Car Loan Rates and Charges for Diwali 2025
Banks are competing fiercely to attract buyers, with some offering rates as low as 7.60% and waiving processing fees to sweeten the deal. Below is a detailed look at the rates and charges as of October 8, 2025:
| Lender | Interest Rate (% p.a.) | EMI (Rs) for Rs 5 Lakh, 5 Years | Processing Fee (% of Loan Amount) |
|---|---|---|---|
| Union Bank of India | 7.80–9.70 | 10,090–10,550 | Up to Rs 1,000 (Waived for festive offer) |
| Punjab National Bank | 7.85–9.70 | 10,102–10,550 | Up to 0.25% (Rs 1,000–1,500) |
| Bank of Baroda | 8.15–11.60 | 10,174–11,021 | Up to Rs 2,000 |
| Canara Bank | 7.70–11.70 | 10,067–11,047 | Up to 0.25% (Rs 1,000–5,000) |
| Bank of India | 7.85–12.15 | 10,102–11,160 | Up to 0.25% (Rs 2,500–10,000) |
| UCO Bank | 7.60–10.25 | 10,043–10,685 | 0.50% (Rs 5,000) |
| State Bank of India | 8.80–9.90 | 10,331–10,599 | NIL |
| IDBI Bank | 8.30–9.15 | 10,210–10,416 | Up to Rs 2,500 |
| Bank of Maharashtra | 7.70–12.00 | 10,067–11,122 | Up to 0.25% (Max Rs 15,000, waived for festive offer) |
| Indian Overseas Bank | 7.80–12.00 | 10,090–11,122 | 0.50% (Rs 500–5,000) |
| ICICI Bank | 8.50 onwards | 10,258 onwards | Up to 2% |
| HDFC Bank | 9.20 onwards | 10,428 onwards | Up to 1% (Rs 3,500–9,000) |
| Karnataka Bank | 8.97–11.66 | 10,372–11,037 | Up to 0.60% (Rs 2,500–11,000) |
| Federal Bank | 10.00 onwards | 10,624 onwards | Rs 2,000–4,500 |
| Punjab and Sind Bank | 7.75–14.25 | 10,078–11,699 | 0.25% (Rs 1,000–15,000, 50% off for select schemes) |
| Indian Bank | 7.75–9.85 | 10,078–10,587 | Rs 1,000 |
| IDFC FIRST Bank | 9.99 onwards | 10,621 onwards | Up to Rs 10,000 |
| Central Bank of India | 7.85–9.45 | 10,102–10,489 | 0.50% (Rs 2,000–20,000, waived till 31.03.2026) |
Note: Bank of Maharashtra offers a 0.25% interest rate concession for existing home loan borrowers and customers with at least 6 months of banking relationship. Punjab and Sind Bank provides up to 50% off processing fees for its Apna Vahan Sugam scheme.
Festive Offers Lower Borrowing Costs
The festive season has prompted banks to roll out special concessions to attract car buyers. Union Bank of India and Bank of Maharashtra are waiving processing fees entirely under their festive schemes, while Central Bank of India has extended its no-processing-fee offer until March 31, 2026. Punjab and Sind Bank is offering up to 50% off processing fees for select loan schemes, significantly reducing the overall cost of borrowing.
These incentives, combined with lower GST on cars, have enhanced affordability, driving record bookings for automakers. Maruti Suzuki and Hyundai, in particular, have reported strong growth in demand, reflecting robust consumer sentiment ahead of Diwali.
How to Pick the Best Car Loan
Financial experts urge borrowers to look beyond attractive interest rates when choosing a car loan. Key factors to consider include:
- Processing Fees: Even small fee waivers during festive offers can reduce long-term costs.
- EMI Affordability: Ensure monthly payments fit comfortably within your budget.
- Prepayment Flexibility: Check for penalties on early loan repayment to avoid surprises.
- Total Loan Cost: Evaluate both interest rates and fees over the full loan term for a clear picture.
With lenders vying for customers amid surging vehicle demand, festive offers like waived processing fees and competitive car loan rates in India make Diwali 2025 an ideal time to finance your dream car.
Note: Please check bank rate of interest updates in the related official bank website.
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