Electric Vehicle Loan in India: EV Finance Rates & Guide
Electric Vehicle Loan in India: EV Finance Rates and Complete Guide
India’s electric vehicle market is growing fast, and so is EV financing. Banks and NBFCs now offer dedicated electric vehicle loans with competitive interest rates, often lower than regular car loans. Rates start from around 8.50% per annum for EVs, and many lenders offer additional concessions to promote clean mobility.
This guide covers EV loan rates, eligibility, documents, government incentives, and how to apply in India.
Overview of Electric Vehicle Loans in India
An EV loan works like any other vehicle loan: the vehicle is collateral, and you repay in EMIs. What makes EV loans different is the policy support behind them. The RBI has classified electric vehicles under priority sector lending in certain categories, which encourages banks to lend to this segment at lower rates.
The government’s FAME-II scheme and PM E-DRIVE initiative offer upfront subsidies on electric two-wheelers, three-wheelers, and buses, reducing the loan amount you need. Many states like Delhi, Maharashtra, Gujarat, and Tamil Nadu also have additional EV subsidies on top of the central subsidy.
EV loans cover a wide range: electric scooters, electric cars, e-rickshaws, electric buses, and electric commercial vehicles.
EV Loan Interest Rates in India
| Lender | Interest Rate (p.a.) | Special EV Rate? |
|---|---|---|
| SBI Green Car Loan | 8.50% – 9.50% | Yes, 0.20% concession on green vehicles |
| HDFC Bank | 8.75% – 10.00% | Special rates for select EV brands |
| ICICI Bank | 8.99% – 10.50% | Yes, on select electric cars |
| Axis Bank | 9.25% – 11.00% | Yes, for electric two and four-wheelers |
| Kotak Mahindra Bank | 8.99% – 11.00% | On select EV models |
SBI’s Green Car Loan explicitly offers a 20 basis point reduction for EVs compared to ICE vehicles, making it one of the most attractive options for electric car buyers.
Government Subsidies and Incentives for EV Buyers
- PM E-DRIVE Scheme: Central subsidy of Rs. 10,000 per kWh on electric two-wheelers and Rs. 50,000 on three-wheelers
- FAME-II: Subsidies on electric buses and commercial vehicles
- Income Tax: Section 80EEB allows a deduction of up to Rs. 1.5 lakh on interest paid on EV loans (for individuals buying for personal use)
- State subsidies: Delhi offers up to Rs. 30,000 on e-scooters; Gujarat and Maharashtra have their own subsidy slabs
Eligibility Criteria for an EV Loan
For Salaried Individuals
- Age: 21 to 60 years
- Minimum income: Rs. 20,000 per month for four-wheelers; Rs. 10,000 for two-wheelers
- CIBIL score: 700 or above
- At least 1 year in current employment
For Self-Employed Individuals
- Age: 21 to 65 years
- Minimum annual income: Rs. 2 lakh (as per ITR)
- Business vintage: At least 2 years
- CIBIL score: 700 or above
Documents Required for an EV Loan
- Aadhaar card, PAN card for KYC
- Address proof: Utility bill or rental agreement
- Income proof: Salary slips and bank statements (salaried) or ITR (self-employed)
- Proforma invoice from the EV dealer
- For Section 80EEB benefit: Certificate from lender confirming it is an EV loan
Application Process for an EV Loan
- Choose your EV. Shortlist the electric vehicle model. Popular brands include Tata Motors, MG Motor, Ola Electric, Ather, Bajaj Chetak, and TVS iQube.
- Check for applicable subsidies. Visit the FAME-II portal or your state’s EV policy page to see what subsidies apply to your chosen model.
- Apply for the loan. Apply online through the bank’s website or at the dealership. Many EV dealers have in-house finance desks.
- Verification and approval. The bank verifies your documents and credit history. Approval takes 1 to 3 working days.
- Disbursal. The bank pays the dealer. Subsidies are usually deducted upfront from the invoice, reducing the effective loan amount.
Frequently Asked Questions
Is there a tax benefit on EV loans in India?
Yes. Under Section 80EEB of the Income Tax Act, individuals can claim a deduction of up to Rs. 1.5 lakh per year on the interest paid on an EV loan taken for personal use. This benefit is available from FY 2019-20 onwards.
Can I get an EV loan for an electric two-wheeler?
Yes. Most banks and NBFCs offer EV loans for electric scooters and motorcycles. The loan amount, interest rate, and tenure vary by lender. Ola Electric, Ather, Hero Electric, and Bajaj Chetak are commonly financed models.
What is the charging infrastructure requirement for EV loan approval?
Banks do not currently require proof of charging infrastructure as a loan condition. However, some lenders may ask about the availability of a home charging point, especially for commercial EV loans.
Do EV loans have higher or lower rates than regular car loans?
EV loans often come with the same or slightly lower rates than comparable ICE vehicle loans, particularly with banks like SBI that offer explicit green vehicle concessions. Always compare the effective APR across lenders.
