As the festive season of 2025 approaches, banks across India are rolling out attractive car loan schemes to boost automobile sales. From reduced interest rates to festive concessions on processing fees, both public and private sector banks are competing to lure customers looking to purchase their dream car this season.
According to data sourced from Paisabazaar, leading banks such as Bank of Baroda, Canara Bank, HDFC Bank, ICICI Bank, and UCO Bank are offering competitive car loan deals with interest rates starting as low as 7.60% per annum.
Car Loan Interest Rate Comparison (October 2025)
| Bank | Interest Rate (p.a.) | Processing Fee |
|---|---|---|
| UCO Bank | 7.60% – 10.25% | 0.50% (Max ₹5,000) |
| Bank of India | 7.85% – 12.05% | Up to 0.25% |
| Canara Bank | 7.70% – 11.70% | Waiver till Sept 30 |
| Bank of Baroda | 8.15% – 11.60% | Up to ₹2,000 |
| State Bank of India | 8.80% – 9.90% | ₹750 – ₹1,500 |
| IDBI Bank | 8.30% – 9.15% | Nil till Sept 30 |
| HDFC Bank | 9.20% onwards | Up to 1% (₹3,500–₹9,000) |
| ICICI Bank | 9.10% onwards | Up to 2% |
| Federal Bank | 10.00% onwards | ₹2,000 – ₹4,500 |
| IDFC First Bank | 9.99% onwards | Up to ₹10,000 |
Car Loan Interest Rates for Festive Season 2025
Public-sector banks are at the forefront of offering low starting rates. For example: UCO Bank is currently offering the most competitive interest rate, beginning at 7.60%. Bank of India and Indian Bank are also offering car loans starting below 8%. On the other hand, private banks like ICICI Bank and HDFC Bank have higher entry-level rates, beginning from 9.10% and 9.20%, respectively. In most cases, the loan is available for amounts up to ₹10 lakh (and higher, depending on customer eligibility) with a tenure of up to five years.
Also Read: GST Cut 2025: Will Cheaper Hatchbacks Like Wagon R & Tiago Revive India’s Small Car Market?
Processing Fee Waivers and Festive Discounts
Alongside lower interest rates, several banks have sweetened the deal with concessions on processing fees. For instance: Canara Bank is offering 100% waiver on processing fees under its Retail Loan Festival scheme valid till 30th September 2025. State Bank of India (SBI) has introduced festive pricing where processing fees range from ₹750 to ₹1,500, among the lowest in the market.
IDBI Bank has completely waived processing charges till 30th September 2025. Central Bank of India and Indian Overseas Bank are charging around 0.50% of the loan amount, while private lenders like ICICI Bank levy up to 2% of the loan value as processing fees.
What Should Buyers Keep in Mind?
- Credit Score Matters – Borrowers with a CIBIL score above 750 often qualify for the lowest interest rates.
- Income Stability – Banks assess salary or business income before approving loans.
- Hidden Charges – Apart from interest rates, applicants should check processing fees, prepayment penalties, and other charges.
- Loan Tenure – A longer tenure lowers EMIs but increases overall interest payout.
Expert Take
According to market experts, the festive season is the best time to buy a car through financing. With most banks launching special campaigns, borrowers have the chance to save significantly on both EMIs and upfront costs. However, comparing multiple offers before committing is crucial.
Also Read: Full Buyer’s Guide: Hyundai Creta Latest Price List & EMI Plans After GST Cut
Final Word
With car loan rates starting from just 7.6%, this festive season could be the perfect time to bring home a new car. Whether opting for public banks like UCO Bank and Bank of Baroda or private lenders like ICICI and HDFC Bank, borrowers have a wide range of options to choose from.
Also Read: What to Do If You Lose Your Credit Card: Instant Action Plan
Make sure to evaluate your credit score, repayment capacity, and hidden charges before finalizing the loan.