Planning a ₹10 Lakh Car Loan? These Banks Offer the Cheapest 5-Year EMIs in 2025

Buying a new car is an exciting milestone, but choosing the right loan can make a huge difference in how much you ultimately pay. While dealerships often promote attractive financing schemes, the smartest approach is to compare interest rates across banks. Even a small difference in interest rates can significantly impact your monthly EMI, especially for a loan amount as high as ₹10 lakh.

For those planning to take a car loan of up to ₹10 lakh with a repayment tenure of five years, both public and private sector banks are currently offering interest rates ranging from 7.85% to 9.99%. These rates determine how much EMI you will pay every month. Here’s a detailed look at the latest EMI calculations from major banks to help you find the most affordable option.

What Exactly Is an EMI?

An EMI, or Equated Monthly Instalment, is the fixed amount a borrower pays every month toward repaying a loan. It includes two components:

• Principal: The original loan amount

• Interest: The cost of borrowing, based on the bank’s interest rate

A lower interest rate leads to a lower EMI. This is why comparing rates across banks is essential before choosing a loan. Even a difference of 0.10%–0.20% can save you thousands over the loan tenure.

Banks Offering the Cheapest 5-Year Car Loan EMIs

Below is a bank-wise breakdown of EMIs for a ₹10 lakh car loan over a 5-year tenure:

1. Punjab National Bank (PNB)

• Interest Rate: 7.85%

• EMI: ₹20,205
  PNB currently offers the lowest interest rate on car loans, making it the most affordable choice for borrowers seeking lower monthly payments.

2. Union Bank of India

• Interest Rate: 7.90%

• EMI: ₹20,229
  Union Bank’s slightly higher rate keeps the EMI almost similar to PNB, making it another strong contender for cost-effective financing.

3. IDBI Bank

• Interest Rate: 7.95%

• EMI: ₹20,252
  With a moderate rate, IDBI Bank offers competitive EMIs that remain lower than most private banks.

4. Bank of Baroda

• Interest Rate: 8.15%

• EMI: ₹20,348
  The EMI here rises slightly with the higher rate, but Bank of Baroda still remains in the lower range compared to other banks.

5. Canara Bank

• Interest Rate: 8.20%

• EMI: ₹20,372
  Canara Bank’s offering is close to Bank of Baroda, with only a small increment in EMI.

6. State Bank of India (SBI)

• Interest Rate: 8.75%

• EMI: ₹20,638
  SBI, India’s largest lender, offers a safe and trusted option, though the EMI is higher due to the increased interest rate.

7. Axis Bank

• Interest Rate: 8.80%

• EMI: ₹20,661
  Axis Bank’s EMI falls in the mid-range category for car loans among private banks.

8. HDFC Bank

• Interest Rate: 9.40%

• EMI: ₹20,953
  HDFC Bank’s higher interest rate results in a notably higher EMI, which may impact long-term affordability.

9. IDFC First Bank

• Interest Rate: 9.99%

• EMI: ₹21,242
  IDFC First Bank has the highest interest rate on the list, making its EMI the highest among all compared banks.

Which Bank Should You Choose?

If your priority is the lowest EMI, public sector banks like PNB, Union Bank, and IDBI Bank clearly offer the most economical interest rates. However, the final choice should also factor in:

• Processing fees

• Loan tenure flexibility

• Prepayment or foreclosure charges

• Your past banking relationships

• Eligibility criteria and documentation

For borrowers seeking reliable service with lower long-term costs, PNB and Union Bank currently provide the best value. Those who prefer private banking services may consider Axis Bank for a balance between service quality and EMI.

Final Takeaway

When planning a ₹10 lakh car loan, never rely solely on dealership financing. Always compare bank interest rates, as even a minor difference can significantly reduce your EMI and total interest burden. With rates varying from 7.85% to 9.99%, selecting the right bank can help you save thousands over five years.

A careful review of your EMI options ensures a smoother, more cost-effective car-buying experience.