With the growing focus on sustainability and eco-friendly living, Electric Vehicles (EVs) are fast gaining popularity in India. As the adoption of EVs increases, financial institutions are also stepping up to support this shift by offering special car loans on electric vehicles.
What is an EV car loan?
According to the HDFC Bank’s website, “An EV Car Loan is an auto loan designed to finance the purchase of electric vehicles. These loans function similarly to traditional car loans, where the lender provides funds to you to purchase the vehicle, and you repay the loan in monthly instalments over a predetermined period.”
Several banks in India are offering competitive interest rates on vehicle loans, with slightly lower rates for electric vehicles to promote eco-friendly transportation. Among public sector banks, Indian Overseas Bank offers interest rates starting from 8.15% for electric vehicles and 8.35% for non-electric ones.
Union Bank follows closely and offers rates of 8.20% on electric vehicles and 8.30% on non-electric vehicles respectively. PNB offers slightly higher interest rates at 8.35% for EVs and 8.40% for others, while Central Bank maintains a flat 8.35% for both electric and non-electric vehicle loans. Punjab and Sind Bank charges 8.40% for electric vehicles and 8.50% for non-electric, whereas Canara Bank offers 8.55% and 8.65%. Indian Bank has rates of 8.70% for EVs and 8.75% on other vehicles.
Among the higher end, State Bank of India offers 9.10% on loans for EVs and 9.20% on loans for other vehicles, while HDFC Bank offers interest rates of 9.20% on electric vehicles and 9.27% on non-electric vehicles, respectively. Karnataka Bank has the highest rates among the listed banks, at 9.32% for electric vehicles and 9.42% for non-electric vehicles.
Comparison between car loan vs EV car loan
| Bank | Interest rate (Per annum) | |
| Electric Vehicles | Non-electric Vehicles | |
| Indian Overseas Bank | 8.15% | 8.35% |
| Union Bank | 8.20% | 8.30% |
| Punjab National Bank | 8.35% | 8.40% |
| Central Bank of India | 8.35% | 8.35% |
| Punjab and Sind Bank | 8.40% | 8.50% |
| Canara Bank | 8.55% | 8.65% |
| Indian Bank | 8.70% | 8.75% |
| State Bank of India | 9.10% | 9.20% |
| HDFC Bank | 9.20% | 9.27% |
| Karnataka Bank | 9.32% | 9.42% |
Interest rates for electric and non-electric car loans as advertised on respective banks’ websites on May 22, 2025. Rates are subject to change based on borrower’s eligibility. Compiled by BankBazaar.com. EV car loans typically offer a marginally lower interest rate than traditional car loans, which translates to savings over the loan tenure. EV buyers may also benefit from government subsidies, reduced registration fees, and tax exemptions—benefits not available with regular car loans.
Benefits of buying an electric vehicle
According to the Niti Ayog website, below are the key benefits for EV buyers:
- Purchase Incentives: Direct discount provided to the user on the cost of the electric vehicle
- Coupons: Financial incentive where the amount is reimbursed later
- Interest Subventions:Discount offered on the interest rate while availing loan
- Road tax exemption:Road tax at the time of purchase is waived off
- Registration fee exemption:One-time registration fee applicable on new vehicle purchase is waived off
- Scrapping incentives:Provided upon de-registering old Petrol and Diesel Vehicles
- Others: Incentives such as interest-free loans, top-up subsidies, special incentives on electric three-wheelers, etc. can also be availed
