How to Get an Affordable Auto Loan During Navratri Festival Season: Your Ultimate Guide

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The festival season in India is not just for celebrations, it’s also the perfect time to buy a vehicle with attractive loan offers and discounts. Car dealerships and banks roll out special schemes with lower interest rates and waived fees which make auto loans more affordable for buyers. But grabbing the best deal requires insider knowledge on interest types, negotiation tactics and lender comparisons.

This detailed guide explores how to get the best auto loan deal this festival season from understanding fixed vs floating interest rates to negotiating with banks, choosing the right vehicle and key dos and don’ts for auto loans.

Why Festival Season Is Best for Auto Loans

During festivals like Diwali and Navratri, banks and NBFCs offer one of the lowest interest rates on auto loans in the year. Discounts such as the waiver of processing fees and GST reductions for small cars under 1200cc help reduce overall costs. For example, in September 2025, some banks offered car loan interest rates as low as 7.6% to 7.85% for new cars along with concessions till the end of the month by providing an excellent opportunity for buyers to save significantly on EMIs.

Types of Interest Rates on Auto Loans: Fixed vs Floating

Understanding the type of interest rate is vital before applying for a loan:

  • Fixed Interest Rate: The rate remains constant throughout the loan tenure. This means your EMI stays the same every month which helps with easy budgeting. However, fixed rates are usually 1% to 2.5% higher than floating rates and won’t benefit you if market interest rates fall later.
  • Floating Interest Rate: This rate varies according to the market and RBI’s repo rates. While initially lower than fixed rates, EMIs can fluctuate upwards or downwards over the loan period. Floating rates are generally better for long tenures if one can bear some EMI uncertainty.
Tip: Choose fixed rates for short-term stability and floating rates if you expect dropping rates and can manage variable EMIs.

How to Negotiate Auto Loan Interest Rates With Banks

Negotiation is key to lowering your auto loan interest rate and getting better terms:

  • Know Your Credit Score: Banks offer the best rates to borrowers with a high credit score (750+). Before applying, check and correct any errors in your credit report.
  • Compare Bank Offers: Don’t settle for the dealer’s offer. Research and compare rates from multiple banks, including public sector banks and private lenders.
  • Use a Co-signer: If your score is low, adding a co-borrower with a better credit rating can improve your loan terms.
  • Leverage Your Relationships: Existing account holders or salaried employees in reputed firms often get preferential rates.
  • Seek Festival Deals: Many banks waive processing fees and offer limited-time interest concessions during festivals, so act quickly to lock in these offers.

Comparing Interest Rates of Top 5 Banks (New Car Loans)

As of September 2025, here is a comparison of indicative interest rates for new car loans of Rs 10 lakh over 5 years from top banks:

BankInterest Rate Range (Approx)Processing FeeSample EMI (Rs 10 lakh)
UCO Bank7.60%Varies, sometimes waived~Rs 20,043
Canara Bank7.70%Waived during festival~Rs 20,348
Bank of Maharashtra7.70%Nil or lowModerate
Punjab National Bank7.85%StandardRs 20,205
Union Bank of India7.90%StandardRs 20,229
State Bank of India8.85%Rs 750 upwardsRs 20,686
ICICI Bank9.15%Up to 2% loan amountRs 20,831
HDFC Bank9.40% (rack rate)Rs 3500 to Rs 9000Rs 20,953
Note: The actual rate offered depends on credit score, income, loan amount and tenure. Festival season discounts like waived processing fees can also reduce overall cost.

Choosing the Right Vehicle for Your Auto Loan

  • New vs Pre-owned: Loans for new cars typically have lower interest rates (around 7.6% to 9%) compared to pre-owned vehicles where rates can be 2-4% higher due to higher risk.
  • Type of Vehicle: Small cars under 1200cc now enjoy lower GST (18%), decreasing total cost and making them attractive for first-time buyers. SUVs and luxury cars may have higher loan rates.
  • Electric Vehicles (EVs): Some banks offer lower rates and special schemes for EVs to promote green mobility.

Dos and Don’ts While Taking an Auto Loan

Dos

  • Do check and improve your credit score before applying.
  • Do compare interest rates, processing fees and prepayment penalties from multiple lenders.
  • Do negotiate your rate especially during festival offers.
  • Do fix your interest rate if you prefer stable EMIs or choose floating if you expect rates to fall.
  • Do calculate EMIs and total payable interest ahead using online calculators.

Don’ts

  • Don’t rush into a loan without checking eligibility and total costs.
  • Don’t ignore hidden charges like processing fees or insurance.
  • Don’t stretch loan tenure unnecessarily just to lower EMI as it increases interest paid.
  • Don’t depend solely on dealer financing; always check bank offers.

Conclusion

The festival season in India offers a golden window to secure an auto loan at the most affordable rates with exciting concession offers. Understanding fixed and floating interest rates, actively negotiating with banks, comparing top lenders like UCO Bank, Canara Bank, and SBI, and choosing the right vehicle can save thousands over the loan tenure. Always check your credit score, analyze all loan costs, and act fast to leverage festive deals to drive your dream car home affordably.

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