In September 2025, India’s auto market is buzzing with new car launches, EV entries, and special festive discounts. Alongside, banks and NBFCs are competing to provide the best car loan rates to attract customers during this peak buying season. Whether you are buying a compact hatchback, premium SUV, or an EV, understanding car loan rates in India is crucial to making a smart financial decision.
Why Car Loan Rates Matter in 2025
Cars have become more expensive due to rising input costs and advanced technologies like hybrids and EVs. Financing remains the most popular option, with nearly 80% of cars in India purchased through loans. Choosing the right loan with lower interest rates can save lakhs over the repayment period.
In 2025, most banks are offering competitive rates between 8.2% and 10.5%, depending on the borrower’s credit profile, vehicle type, and repayment tenure.
Top Banks and Car Loan Interest Rates in September 2025
Here’s a snapshot of leading banks and their current car loan rates:
| Bank / Lender | Interest Rate (p.a.) | Loan Tenure | Key Highlights |
|---|---|---|---|
| State Bank of India (SBI) | 8.35% – 9.25% | Up to 7 years | Low processing fees, special EV loan schemes. |
| HDFC Bank | 8.50% – 9.75% | Up to 7 years | Quick digital approval, festive cashback offers. |
| ICICI Bank | 8.65% – 9.85% | Up to 8 years | Flexible EMI options, special tie-ups with dealers. |
| Axis Bank | 8.70% – 10.00% | Up to 7 years | Pre-approved loans for select customers. |
| Punjab National Bank (PNB) | 8.25% – 9.40% | Up to 7 years | Attractive rates for government employees. |
| Kotak Mahindra Bank | 8.80% – 9.95% | Up to 7 years | 100% on-road financing available. |
| NBFCs (e.g., Tata Capital, Bajaj Finance) | 9.00% – 10.50% | Up to 6 years | Faster approvals, slightly higher rates. |
Note: Actual rates may vary based on credit score, loan amount, and vehicle model.
EMI Calculation Example
For a loan of ₹10 lakh over 5 years:
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At 8.5% interest rate, EMI = approx. ₹20,492.
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At 9.5% interest rate, EMI = approx. ₹21,033.
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At 10.5% interest rate, EMI = approx. ₹21,566.
This small percentage difference can result in ₹60,000–₹1 lakh extra repayment over the tenure.
EV and Hybrid Car Loan Schemes
With EV adoption on the rise in India, many banks now offer preferential car loan rates for electric and hybrid cars:
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SBI Green Car Loan: Up to 8 years, interest rate starting from 8.2%.
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HDFC EV Loan: 0.25% lower interest rate for EVs compared to petrol/diesel cars.
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ICICI Green Mobility Loan: Longer repayment tenure with minimal processing fees.
These schemes are meant to encourage EV purchases by reducing ownership costs.
Factors Affecting Car Loan Rates in 2025
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Credit Score: A score above 750 ensures better rates.
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Income & Job Profile: Salaried government employees and professionals get lower interest.
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Vehicle Type: EVs and hybrid cars attract special loan schemes.
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Down Payment: Higher down payment often reduces EMI burden.
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Tenure: Longer tenure reduces EMI but increases overall interest outflow.
Tips to Get the Best Car Loan in 2025
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Compare Rates: Always compare across at least 3–4 banks/NBFCs.
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Check Pre-Approved Offers: Banks often provide better deals to existing customers.
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Look for Festive Discounts: September–December is the festive season; banks tie up with automakers for special rates.
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Negotiate Processing Fees: Many banks waive or reduce fees during this season.
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Use EMI Calculators: Plan repayment in advance.
Rivals in the Auto Finance Market
Apart from traditional banks, NBFCs and fintech players are reshaping the loan market in India. Companies like Tata Capital and Bajaj Finance offer fast-tracked approvals, while digital lenders provide instant pre-approved loans with flexible tenures. However, these often come with slightly higher rates.
Who Should Opt for Car Loans Now?
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First-Time Car Buyers: Benefiting from festive deals and low-interest schemes.
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EV Buyers: To take advantage of green loan offers.
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Business Professionals: Looking for tax benefits through vehicle loans.
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Families: Upgrading to larger SUVs or premium sedans.
Verdict: Should You Buy a Car on Loan in September 2025?
With competitive interest rates between 8.2% and 10.5%, September 2025 is an excellent time to finance a car purchase. With banks introducing EV-specific loans, flexible EMI plans, and festive discounts, buyers can save significantly by choosing the right lender.
For those planning to purchase a new vehicle, comparing offers and using EMI calculators is the key to making the most of current deals.
FAQs
What are the current car loan rates in India in September 2025?
Rates range between 8.2% and 10.5%, depending on the lender and borrower profile.
Which bank offers the best car loan for EVs?
SBI and HDFC currently offer the most competitive rates for electric cars, starting as low as 8.2%.
What is the maximum tenure for car loans in 2025?
Most banks allow up to 7 years, while some extend to 8 years for premium cars.
How much EMI will I pay for a ₹10 lakh loan?
For 5 years, EMI will range between ₹20,492 and ₹21,566, depending on the interest rate.
Should I choose a bank or an NBFC for a car loan?
Banks usually offer lower rates, while NBFCs provide faster approvals and flexible terms.