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Punjab National Bank is a prominent name in the Indian banking industry. It is a public sector bank that has caters to national and international customers to give timely and effective banking solutions for their banking needs.

The car loans of the Bank are among the popular products of the bank due to the affordable interest rates and the comfortable repayment tenure that ensures the customers that they are not burdened due to the EMI expense on account of the loan. The details of the car loans of the bank are discussed hereunder.

Key Features of Car Loans at PNB

Punjab National Bank Car Loan Interest Rates

The car loans of PNB are among the popular loan products in the market in this segment. Being one of the largest public sector banks and having a huge customer base, the bank is able to offer loans at reasonable rates as compared to its peers.

The key features of the car loans of the bank are tabled below.



Maximum Amount of Loan

For individuals/proprietors

Lower of,

  • Rs. 1,00,00,000
  • 25 times the Gross Monthly Salary OR Pension

For Business Concerns

  • No upper limit

Rate of Interest

For New Cars

  • 7.55% - 7.80%

For Used Cars

  • 8.55% - 8.80%


For New Cars

  • Maximum 84 months (7 years)

For Used Cars

  • Maximum 60 months (5 years)

Primary Security

Hypothecation of the vehicle to be purchased out of loan 


  • Guarantee acceptable in case of Gross Monthly Salary of applicant being less than Rs. 50,000
  • No guarantee for selected class of employees (permanent employees of Government, etc.)
  • For all other cases, third party guarantee acceptable

Processing Charges

0.25% of the Loan amount


For New Cars

  • 15% of on-road price
  • 10% in case of tie up with dealers

For Used Cars

  • 25% of on-road price

These highlights mentioned above are discussed in detail hereunder.

Quantum of Loan

Punjab National Bank provides car finance to the tune of up to 85% of the value of the vehicle. The bank has also set a maximum ceiling for loans that can be provided by the bank. The maximum amount is set for individual borrowers or proprietors. The quantum of loan to be provided to such borrowers is,

Lower of,

  • Rs. 1,00,00,000
  • 25 times the Gross Monthly Salary OR Pension

The bank may provide loans for a higher amount based on the merit of a particular case and on their discretion.

The bank has not set any upper limit for loans to be sanctioned to Business concerns (whether corporate or non-corporate). It is sanctioned on need based and is dependent on the credit profile of the applicant as well as their repayment capacity.

Rate of Interest

PNB Car Loans are based on the floating rates of interest as well as fixed rate of interest. It also offers a concessional rate of interest to women borrowers and borrowers from defence or paramilitary background.  The rates also differ in case of loans for purchase of new cars or second hand cars. The current applicable rates levied by the Bank for PNB Car loans are tabled below.

Type of vehicle

Rate of Interest (Floating rates)

New Cars

7.55% - 7.80%

Used Cars

8.55% - 8.80%

In case of defence or paramilitary personnel, the rate of interest is 7.30% for new cars and 8.30% for used cars.

The fixed rate of interest across all the categories of borrowers is mentioned below

Type of vehicle

Rate of Interest (Fixed rates)

New Cars


Used Cars



The repayment period of car loans of the bank is varied in case of new cars or used cars. The maximum period of repayment in case of new cars is 7 years whereas in case of used cars it is 5 years.

Furthermore, the bank provides the benefit of flexible tenure in case of agriculturists or persons engaged in allied activities. The tenure for loans sanctioned to them can be half yearly or yearly intervals coinciding the time of harvest.


Margin money is to be mandatorily provided by the borrower as part of the loan application process. The bank has specifically provided the percentage of margin money to be provided in case of purchase of used cars as well as new cars. The minimum margin money required by the Bank is tabled below.

Type of Loan

Margin Money

New Cars

  • 15% of the on road price of the car
  • 10% of the on road price of the car in case of  in case of tie up with dealers
  • 25% of the on road price of the car in case of reimbursement of cost of new car purchased out of own funds

Used Cars

25% of the on road price of the car


The vehicle purchased out of the loan is the primary security against the loan provided by the Bank. PNB is entitled to have a hypothecation charge for the vehicle.

Apart from the above, the borrower will be required of the on road price of the car to provide additional guarantee in case the gross monthly salary is less than Rs. 50,000. However, no additional guarantee is required in case the borrower is a permanent employee of the Central or State Government, PSBs, MNCs, Listed Companies of BSE or NSE. In other cases, a third party guarantee or a collateral security is to be provided by the borrower.

Processing fees

The Bank levies 0.25% of the loan amount as processing fees that are levied at the time of sanction of loan. These charges are subject to minimum or maximum amounts which are tabled below.

Processing fees


Minimum amount

Rs. 1,000

Maximum amount

Rs. 1,500

Part payment or Foreclosure Charges

The bank levies no prepayment charges in case of loan sanctioned on floating rates. In case of loans based on fixed rates of interest, the processing charges are 2% of outstanding amount. For further details, the borrowers can contact the bank by visiting the branch or by contacting through phone banking services.

What are the factors influencing the rate of interest on car loans?

There are many factors that affect the car loans interest rates of any lender. These factors depend on the lender policies, cost to the lender for lending, type of loan, external factors, credit profile of the applicant, etc. Some of such factors are discussed below.

Type of interest rate (whether Floating rate or Fixed rate)

Fixed rates of interest are generally costlier than floating rates of interest. Hence, an applicant generally prefers a lender providing a loan at floating rate of interest.

Loan amount

A higher loan amount increases the risk of default on part of the borrower and hence attracts higher interest rates.

Repayment period

The repayment period is the time period allotted to a borrower to repay the loan taken. A reduced tenure will result in reduction in risk of default in case the loan amount is lower. It is also to be considered that a higher loan amount with lower tenure can be termed high risk attracting higher interest.

Credit Score of the applicant

An applicant with higher or moderate credit score will get a better i.e., reduced rate of interest as compared to an applicant with lower credit score. This is on the principle that a person with poor credit score is considered to be a high risk applicant.

Repaying capacity of the applicant

The repaying capacity of the applicant is crucial in determining whether loan can be sanctioned or not. It will also help in ascertaining the applicable rate of interest. Applicants with good repaying capacity will easily get the loan at reduced interest rate.

Type of vehicle

PNB provides loans for new cars at lower interest rates than a loan for used cars.

Margin money

Margin money reduces the risk of the lender. Hence, increased margin money will reduce the loan amount required by the borrower and hence will lower the interest rate.


Inflation directly influences floating interest rates dragging them lower or higher along with it. In case of fixed rate loans, they may become cheaper or costlier depending on the inflation.

FAQs – Punjab National Bank – Car Loan Interest Rates

1. Who is eligible for a car loan from PNB?

Car loan of PNB can be availed by individual borrowers or business concerns whether corporate or non-corporate for purchasing a new car or used car for personal use provided the used car is not older than 3 years.

2. What is the minimum monthly income required to be eligible for the car loan of the bank?

The applicant must have a minimum monthly salary or pension or income of Rs. 25,000 to be eligible for PNB Car Loan. Income of one eligible family member can be included provided such member is a co-borrower.

3. What are the documents needed for PNB Car Loan?

The documents need for PNB Car Loan are,

  • Identity proof
  • Address proof
  • Income proof
  • Bank statement
  • Passport size photographs
  • Duly filled application form

4. Can the PNB Car loan scheme be availed for commercial use?

The bank has specifically provided that the PNB Car Loans can be provided for personal use only. Thus, car loans for commercial use under the PNB car loan scheme are not permitted.

5. When are the pre-payment charges not levied on PNB Car loans?

Prepayment charges will not be levied in following cases,

  • Loans based on floating rates
  • Fixed rate loans where,
    • Loans are prepaid by the borrowers from their own sources
    • Borrowers shift to other bank within 30 days from the date of an upward revision in the interest rate or in case of change in other terms of sanction

6. Can a person apply for a car loan through the website of the bank?

Yes. The option for applying for a car loan through the website of the bank is available on the right corner of the link mentioned below. Home>> Loans>> Vehicle Loans>> PNB Car Loan >> Apply online

7. Can a person get a car loan in the form of reimbursement of a car already purchased out of their own funds?

Yes. PNB provides for reimbursement of the cost of a new Car/ Van/ Jeep/ Multi Utility Vehicle (MUV) or Sports Utility Vehicle (SUV) purchased by an individual/ corporate out of their own funds, provided such car purchase is not older than 3 months.

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