Bank Of Baroda Cuts Car Loan Interest Rate To 7.60%, Offers Zero Prepayment Charges

Bank of Baroda has reduced its car loan interest rates by 30 basis points, bringing the starting floating rate down to 7.60 per cent per annum from the earlier 7.90 per cent. The revised rates have come into effect immediately, the bank said in an official statement.

The rate cut comes shortly after the Reserve Bank of India (RBI) decided to keep the repo rate unchanged at its latest Monetary Policy Committee (MPC) meeting held on February 6, 2026. Although the central bank maintained status quo in this review, Bank of Baroda's move is likely linked to the cumulative 125 basis points repo rate cuts implemented by the RBI during 2025. Banks often pass on the benefit of earlier rate reductions to borrowers in phases, particularly for floating-rate loans.

In addition to the reduced floating rate, the bank is also offering fixed-rate car loans starting at 8.5% per annum. The newly announced 7.60% rate applies to new car purchases and is linked to the borrower's credit profile, meaning customers with stronger credit scores may qualify for the most competitive rates.

To make the offering more attractive, Bank of Baroda has waived prepayment and part-payment charges on floating-rate car loans for individual borrowers. This allows customers to repay their loans early without incurring additional costs, thereby reducing their overall interest burden.
The bank also highlighted that interest on both fixed and floating Baroda Car Loans is calculated on a daily reducing balance basis. Under this method, interest is charged only on the outstanding loan amount each day, making repayments more cost-effective compared to flat-rate calculations. Borrowers can also opt for a repayment tenure of up to 84 months, offering greater flexibility in managing monthly instalments.

Customers can apply for Baroda Car Loans through the bank's digital lending platform available on its official website, via the bob World mobile app, or by visiting any Bank of Baroda branch across India.
Meanwhile, Union Bank of India has also reduced interest rates on select retail loan products, including home, vehicle and personal loans, in December 2025. The move followed the RBI's monetary easing cycle and aims to improve affordability for retail borrowers.

Under Union Bank's revised structure, home loan interest rates have been lowered by 30 basis points to start at 7.15 per cent per annum, down from 7.45 per cent. Vehicle loan rates have been reduced by 40 basis points to 7.50 per cent per annum from 7.90 per cent. Personal loans have seen a sharper reduction of 160 basis points, with rates now starting at 8.75 per cent per annum compared to the earlier 10.35 per cent.

Additionally, Union Bank is offering an extra interest rate concession of 0.10 per cent per annum on eligible green finance home and vehicle loans, encouraging environmentally sustainable purchases.