Car Loan Interest Rate 2026
Own your dream car with ICICI Bank Car Loan, offering interest rates starting from 8.40%* per annum (p.a.) with 100% on-road funding and flexible tenures. Enjoy the convenience of low EMIs and minimal documentation, making the application process hassle-free.
Car Loan Rates
Car loan interest rates are expressed as Annual Percentage Rates (APRs) and are based on a variety of factors, including your income, debt, credit score, Car on-road price, loan amount, loan tenure and RBI Repo Rate. Although the type of car purchased does not directly influence the rate.
New Car: The interest rate for a new car is based on the car segment, CIBIL Score, customer relationship, tenure of the loan, etc.
Car Loan Interest Rates: Effective from June 01, 2026
| Tenure of credit facility | New Car Loans more than 36 months | New Car loans less than 36 months | |
|---|---|---|---|
| New Car Loans | 8.40% onwards based on CIBIL score and car model. | 10.25% onwards based on CIBIL score and car segment |
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About Car Loan Interest Rate
What is the Car Loan Interest Rate?
A Car Loan Interest rate is expressed as Annual Percentage Rate (APR) and is based on a variety of factors. It is charged by the lender on the loan amount availed by the borrower to purchase a car. Although the type of car purchased does not directly influence the rate, its price may. ICICI Bank offers competitive rates, ensuring lower EMIs, minimal paperwork and quick disbursement for financing your car.
Factors Affecting Car Loan Interest Rates
When you are applying for a Car Loan, it is important to understand the factors that influence the Interest Rates, which are as follows:
- Credit score: Your credit history plays an important role. CIBIL score should be 750 or higher, as this helps make the loan disbursal process smooth and hassle-free.
- Loan amount and tenure: The amount borrowed and the loan tenure affect the rate. Generally, a higher loan amount or a longer tenure may influence the applicable interest rate.
- Type of car: The Interest Rate can vary depending on whether you are buying a new car or a (used) car. The Interest Rates for new cars are lower compared to (used) cars.
- Income level and stability: Your income level and job stability reassure lenders of your repayment capacity, potentially affecting your Interest Rate.
- Market conditions: Economic factors and RBI policies may influence Car Loan Interest Rates.
ICICI Bank offers competitive Car Loan Interest Rates, ensuring your dream car is within your reach.
What is the Standard Interest Rate on a Car Loan?
The Car Loan Interest Rate for ICICI Bank customers is 8.40%* minimum.
Car Loan Interest Rate FAQs
How does the tenure affect my Car Loan Interest Rate?
How does the tenure affect my Car Loan Interest Rate?
If the tenure of your car loan is shorter, the car loan interest rate may be higher compared to a longer tenure. For example, when considering the ICICI Bank car loan interest rate for 7 years, a longer tenure spreads the repayment over an extended period, thereby reducing the EMI payable each month.
How is the Car Loan interest calculated?
How is the Car Loan interest calculated?
Car Loan interest calculation is generally based on the loan amount, interest rate and repayment tenure. It is commonly calculated using the reducing balance method, where interest is charged on the outstanding loan amount after each EMI payment.
EMI Calculation Formula
EMI = [P × R × (1 + R)^N] / [(1 + R)^N – 1]
Key Components Used in Calculation
P (Principal Amount) The total amount borrowed for the vehicle purchase.
R (Rate of Interest) The applicable monthly car interest rate charged on the loan amount.
N (Tenure) The repayment tenure selected for the Car Loan is measured in months.
A Car Loan EMI Calculator can help estimate monthly installments, total Car Loan interest payable and the total repayment amount based on the loan amount, Car Loan rates and repayment tenure.
Is 8.40% a good rate for a Car Loan?
Is 8.40% a good rate for a Car Loan?
A Car Loan interest rate of 8.40% considered competitive, depending on factors such as credit score, repayment tenure, income profile and prevailing market conditions. Actual interest rates may vary based on applicant eligibility and bank policies.
What factors affect the APR on a 72-month Car Loan?
What factors affect the APR on a 72-month Car Loan?
A good APR for a 72 month Car Loan depends on the following factors.:
Credit Profile Borrowers with a strong credit history and repayment track record may qualify for competitive Car Loan rates.
Vehicle Type Car Loan interest rates may vary depending on whether the vehicle is new or pre-owned.
Loan Tenure A longer repayment period, such as 72 months, can reduce monthly EMIs but may increase the overall Car Loan interest payable over time.
Market Interest Rates Prevailing market conditions and lender policies can influence APR on a Car Loan.
Is a Guarantor Required while Applying for a Car Loan?
Is a Guarantor Required while Applying for a Car Loan?
While applying for an ICICI Bank Car Loan one does not require a guarantor. However, an applicant with a limited credit history or low income may be required to present a guarantor to get quick loan approval.
What is the Ideal Tenure for Availing a Car Loan?
What is the Ideal Tenure for Availing a Car Loan?
ICICI Bank offers flexible tenure ranging from 12 months to 84 months. However, the ideal tenure for availing a Car Loan depends on the individual preferences and other factors like budget, repayment capacity etc.
Can I get a Lower Interest Rate if I make a Higher Down Payment?
Can I get a Lower Interest Rate if I make a Higher Down Payment?
Yes, making a higher down payment reduces your loan amount, improving your chances of getting a lower Interest Rate. It also reduces your EMI. Use the Car Loan EMI Calculator to check how your EMI changes with a lower loan amount.
Is the Interest Rate of a New Car Loan the same as that of a Used Car Loan?
Is the Interest Rate of a New Car Loan the same as that of a Used Car Loan?
No, the Interest Rate of a Used Car Loan is generally higher than that of a New Car Loan. This is because used vehicles have a lower resale value and higher risk. Always compare rates and choose a vehicle and loan that fulfil your needs while fitting in your budget.
What are the other types of loans offered by ICICI Bank, apart from Car Loan?
What are the other types of loans offered by ICICI Bank, apart from Car Loan?
Besides Car Loan, ICICI Bank offers various other loans such as Personal Loans that are tailored to individual requirements, Two-Wheeler Loans for purchasing bikes or scooters and home loans for purchasing or constructing residential properties. With flexible tenures and competitive Interest Rates, ICICI Bank offers a diverse range of financing solutions to meet various needs.