PNB drops festive offer: Car loans from 7.85% with zero fees, no prepayment charges this Diwali

In a major boost for car buyers this festive season, Punjab National Bank (PNB) has rolled out a car loan offer starting at just 7.85% per annum, making it one of the most competitive rates among public sector banks. The limited-time festive offer, valid from October to December 2025, comes with several borrower-friendly features, including zero processing fees, no prepayment or foreclosure charges on floating-rate loans, and flexible repayment tenures of up to seven years.

According to CA Nitin Kaushik, this offer comes at the perfect time for potential car owners. “Private banks are still hovering near 9–9.5%. Public sector banks like PNB are clearly playing the long game—attracting retail borrowers early and building loyalty through affordability,” he said.

PNB’s festive deal stands out not only for its interest rate but also for its no-fee policy, which can save borrowers thousands of rupees. In comparison, UCO Bank offers rates starting at 7.60%, Canara Bank and Bank of Maharashtra at 7.70%, while State Bank of India (SBI) begins at 8.80%, and HDFC and ICICI Bank hover around 9.10% and above.

The timing couldn’t be better. With Diwali approaching, car sales are soaring on the back of GST rate cuts on small vehicles and record festive demand. The government’s decision to lower the Goods and Services Tax (GST) on cars has effectively reduced on-road prices, making vehicle ownership more affordable.

Auto manufacturers such as Maruti Suzuki, Hyundai, and Tata Motors have reported strong booking volumes, and banks are vying for attention with attractive credit terms. PNB’s combination of low interest, fee waivers, and long repayment tenures could be particularly appealing to middle-class buyers.

A comparison of rates from Paisabazaar.com shows that car loan interest rates currently range between 7.60% and 14%, depending on the bank and borrower profile. For instance, a ₹5 lakh loan over five years would translate into an EMI between ₹10,043 and ₹11,699, based on the lender’s rate.

To complement this trend, several other banks are also launching festive offers. Union Bank of India and Bank of Maharashtra have waived processing fees, while Central Bank of India will not charge any fee until March 2026. Similarly, Punjab and Sind Bank is offering a 50% concession on processing charges for select customers.

Kaushik adds that borrowers should evaluate more than just the headline rate. “Look at the total cost of the loan, including fees and EMIs, and always check for flexibility in prepayment terms. Sometimes, a slightly higher interest rate with better repayment freedom is more beneficial than a lower but rigid one,” he advised.

With interest rates softening, tax incentives, and festival-season rebates, the cost of owning a car in 2025 is at one of its lowest points in recent years. For buyers eyeing their dream car this festive season, PNB’s aggressive pricing could be the nudge they’ve been waiting for.