Compare car loan and personal loan side-by-side — see which costs less for buying your car in India.
Choose personal loan if: buying a used car (>5 yrs old) where car loan is unavailable, you need 100% financing (no down payment), or you have excellent credit score (>800) and can negotiate a very low personal loan rate.
| Bank / NBFC | New Car Rate | Used Car Rate | Max Tenure | Processing Fee |
|---|---|---|---|---|
| SBI Car Loan | 8.65–9.90% | 11.15–13% | 7 years | 0.51% (min ₹500) |
| HDFC Bank | 8.70–9.90% | 13.50–16% | 7 years | 0.4–0.5% |
| ICICI Bank | 9.00–12% | 12–16% | 7 years | Up to 2% |
| Axis Bank | 8.75–14% | 14–18% | 7 years | Up to 1% |
| Kotak Mahindra | 9.00–11% | 12–17% | 5 years | Up to 1.5% |
When buying a car in India, you have two primary financing options: a dedicated car loan (auto loan) or a personal loan. Car loans use the vehicle as collateral, offering lower interest rates (8–14%) but requiring documentation and down payment. Personal loans are unsecured, faster, but expensive (10–24%). For most buyers, car loan wins on cost.
PAN card, Aadhaar (or passport/DL), 3 months' salary slips, 6 months' bank statement, ITR (if self-employed), Form 16, and the car's pro-forma invoice. Banks may also ask for RC book for used car loans.
Technically yes — some lenders offer 100% on-road financing. But this comes at higher rates and requires excellent credit (750+). Most advisors recommend 20% down to reduce EMI burden and depreciation risk.
Yes — timely EMI payments on a car loan significantly improve your CIBIL score. A car loan adds a secured credit line to your profile. Most borrowers see 20–50 point CIBIL score improvement after 12 months of timely payments.
Not for personal use. But if the car is used for business purposes, interest can be claimed as a business expense u/s 37. Self-employed professionals using a car for work can claim full interest deduction in their ITR.
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