Buying a car with a loan means the interest rate can have a major impact on the total amount paid over the repayment period. Along with the interest rate, buyers should also compare the monthly EMI, processing fee, loan tenure and prepayment conditions before choosing a lender.
In September 2026, car loan rates offered by the public sector banks covered in this comparison start from 7.35% per annum. However, the rate available to an individual borrower may differ depending on factors such as credit score, income, repayment record and the bank’s eligibility requirements.
For a ₹5 lakh loan taken for five years, the monthly EMI across the listed banks ranges from ₹9,983 to ₹11,647.
PSU Bank Car Loan Rates in September 2026
The following rates and charges are based on the supplied data as of September 16, 2026. The EMI figures are for a ₹5 lakh loan with a five-year tenure.
| Bank | Interest Rate | 5-Year EMI on ₹5 Lakh | Processing Fee |
|---|---|---|---|
| SBI | 8.70%–9.85% | ₹10,307–₹10,587 | ₹500–₹2,000 |
| 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 | Up to 0.25% (₹2,500–₹10,000) |
| Bank of Maharashtra | 7.45%–11.75% | ₹10,007–₹11,059 | Up to 0.25% |
| Canara Bank | 7.45%–11.45% | ₹10,007–₹10,984 | 0.25% (₹1,000–₹5,000) |
| Central Bank of India | 7.50%–9.30% | ₹10,019–₹10,452 | Nil until Dec. 31, 2026 |
| Indian Bank | 7.55%–9.65% | ₹10,031–₹10,513 | ₹1,200 |
| Indian Overseas Bank | 7.55%–12.00% | ₹10,031–₹11,122 | Nil |
| Punjab and Sind Bank | 7.55%–14.05% | ₹10,031–₹11,647 | 0.25% (₹1,000–₹15,000) |
| Punjab National Bank | 7.60%–10.70% | ₹10,043–₹10,797 | Up to 0.25% (₹1,000–₹1,500) |
| UCO Bank | 7.35%–10.00% | ₹9,983–₹10,624 | 0.5%, up to ₹5,000 |
| Union Bank of India | 7.50%–10.00% | ₹10,019–₹10,684 | Up to ₹1,000 |
SBI to Bank of Maharashtra
State Bank of India is offering car loans at rates between 8.70% and 9.85% per annum. For ₹5 lakh borrowed over five years, the EMI ranges from ₹10,307 to ₹10,587, while the processing fee is between ₹500 and ₹2,000.
Bank of Baroda’s interest rates range from 7.60% to 11.35%. The five-year EMI on ₹5 lakh is between ₹10,043 and ₹10,959, with a processing fee of up to ₹2,000.
Bank of India’s rates start at 7.60% and go up to 12.55%. The corresponding EMI ranges from ₹10,043 to ₹11,262. Its processing charge is up to 0.25%, with the supplied data showing charges between ₹2,500 and ₹10,000.
Bank of Maharashtra offers rates from 7.45% to 11.75%. A ₹5 lakh loan for five years carries an EMI of ₹10,007 to ₹11,059. The processing fee can be up to 0.25%. Eligible existing customers can receive a 0.25% concession on the processing fee.
Canara Bank to Indian Overseas Bank
Canara Bank’s car loan rates range from 7.45% to 11.45%. The five-year EMI on ₹5 lakh is between ₹10,007 and ₹10,984. The processing fee is 0.25%, ranging from ₹1,000 to ₹5,000. According to the supplied information, the bank is offering a 50% processing-fee waiver until September 30, 2026.
Central Bank of India’s rates range from 7.50% to 9.30%, resulting in a five-year EMI of ₹10,019 to ₹10,452 on a ₹5 lakh loan. The processing fee is nil until December 31, 2026.
Indian Bank offers rates between 7.55% and 9.65%. The EMI for ₹5 lakh over five years ranges from ₹10,031 to ₹10,513, while the processing fee is ₹1,200.
Indian Overseas Bank’s car loan rates range from 7.55% to 12%. Its five-year EMI for ₹5 lakh ranges from ₹10,031 to ₹11,122. The processing fee is nil.
Punjab and Sind Bank to Union Bank
Punjab and Sind Bank has car loan rates ranging from 7.55% to 14.05%. The EMI for ₹5 lakh over five years ranges from ₹10,031 to ₹11,647. Its processing fee is 0.25%, with charges ranging from ₹1,000 to ₹15,000.
Under the PSB Apna Vahan Sugam scheme, borrowers can receive a processing-fee concession of up to 50%, according to the supplied data.
Punjab National Bank offers rates between 7.60% and 10.70%. The five-year EMI ranges from ₹10,043 to ₹10,797 for a ₹5 lakh loan. The processing fee can be up to 0.25%, ranging from ₹1,000 to ₹1,500.
UCO Bank offers car loans starting at 7.35%, with rates going up to 10%. The EMI for ₹5 lakh over five years ranges from ₹9,983 to ₹10,624. The processing fee is 0.5%, subject to a maximum of ₹5,000.
Union Bank of India’s rates range from 7.50% to 10%. The corresponding EMI ranges from ₹10,019 to ₹10,684, while the processing fee can be up to ₹1,000.
Why Your Final Car Loan Rate May Be Different
The starting interest rate advertised by a bank does not necessarily apply to every applicant. Lenders assess individual borrowers before deciding the final rate.
Credit score, income, previous repayment history, existing financial commitments and the borrower’s relationship with the bank can all influence the loan offer.
For this reason, buyers should ask the lender for the rate applicable to their individual profile rather than comparing loans only on the basis of the lowest advertised starting rate.
Compare Total Loan Cost, Not Just EMI
The EMI is only one part of the cost of borrowing. A longer loan tenure can bring down the monthly payment, but it can also increase the total interest paid throughout the loan.
Borrowers should therefore compare the overall repayment amount, total interest, processing fee and other applicable charges before making a decision.
Processing fees can vary considerably between banks and may also change because of limited-period offers. For instance, the supplied data shows that Central Bank of India has nil processing fees until December 31, 2026, while UCO Bank charges 0.5%, subject to a maximum of ₹5,000.
Any conditions attached to fee waivers or concessions should be checked before the loan agreement is signed.
Keep EMI and Prepayment Terms in Mind
A car EMI should fit comfortably into the monthly budget after taking other vehicle expenses into account. Fuel, insurance, maintenance and other regular costs can add significantly to the overall cost of owning a car.
Borrowers should also check prepayment and foreclosure rules if they expect to repay the loan early or make part-payments. Applicable charges and conditions can affect the final borrowing cost.
The interest rate, EMI, loan tenure, processing fee, total interest payable and prepayment terms should all be considered together.
Note: The rates and charges mentioned above are as of September 16, 2026, based on the supplied information. EMI calculations are for a ₹5 lakh loan with a five-year tenure. Actual rates, fees and loan terms may vary according to the lender’s eligibility criteria and the borrower’s individual credit assessment. Borrowers should confirm the latest applicable terms directly with the respective bank before taking a loan.