Buying a car in India has traditionally required a down payment of 10–20%, but in September 2025, things are changing. With rising vehicle prices and shifting consumer needs, banks and NBFCs now offer zero down payment car loans, making it easier for people to own cars without paying upfront.
This guide explains how zero down payment car options in India work, their benefits, drawbacks, and which buyers should consider them.
What is a Zero Down Payment Car Loan?
A zero down payment car loan allows you to finance 100% of the on-road cost of the vehicle. This includes:
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Ex-showroom price.
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Road tax and registration.
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Insurance premium.
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Additional accessories (if included in the loan).
Instead of paying anything upfront, buyers start paying only monthly EMIs after loan approval.
Why Are Zero Down Payment Cars Popular in 2025?
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High Car Prices: With SUVs, EVs, and hybrids becoming mainstream, upfront costs are rising.
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Festive Season Demand: Banks are offering flexible financing to attract customers in September–October 2025.
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Young Buyers: Millennials and Gen Z prefer low upfront costs and manageable EMIs.
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Competition Among Lenders: NBFCs and fintechs are pushing aggressive zero down payment schemes.
How Do Zero Down Payment Car Loans Work?
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Loan Coverage: Lender pays the full on-road price to the dealer.
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EMIs: Buyer repays the loan in monthly installments (usually 3–8 years).
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Insurance & Add-Ons: Often bundled in the loan.
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Eligibility: Based on credit score, income, and repayment ability.
Example:
For a car worth ₹12 lakh (on-road):
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Down Payment Loan: Pay ₹2.4 lakh upfront, finance ₹9.6 lakh.
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Zero Down Loan: Finance full ₹12 lakh, but EMI will be higher.
Top Banks & NBFCs Offering Zero Down Payment Cars in 2025
| Lender | Interest Rate (p.a.) | Tenure | Key Highlight |
|---|---|---|---|
| SBI | 8.5% – 9.3% | Up to 7 years | Covers full on-road price, festive discounts. |
| HDFC Bank | 8.7% – 9.5% | Up to 7 years | Digital loan approval, bundled insurance. |
| ICICI Bank | 8.8% – 9.8% | Up to 8 years | Flexible repayment plans. |
| Axis Bank | 8.9% – 10.2% | Up to 7 years | Special offers on EVs. |
| Bajaj Finance | 9.5% – 11% | Up to 6 years | Quick approval, higher EMI flexibility. |
| Tata Capital | 9.0% – 10.5% | Up to 7 years | Available for both ICE cars and EVs. |
Benefits of Zero Down Payment Cars
1. No Upfront Burden
You don’t need to save lakhs for a down payment, making car ownership instantly accessible.
2. Easy Approval for Salaried Buyers
Banks approve zero down loans easily for those with a stable income and good credit score.
3. Better Car Upgrades
Customers can choose higher trims or EVs without worrying about upfront costs.
4. Festive Season Offers
In September 2025, many banks are waiving processing fees, making these loans even more attractive.
Drawbacks of Zero Down Payment Cars
1. Higher EMIs
Since the entire on-road cost is financed, monthly EMIs are higher compared to traditional loans.
2. More Interest Paid Overall
Over a 7-year tenure, buyers may end up paying ₹1–1.5 lakh extra interest.
3. Strict Eligibility
Requires a credit score above 750 and stable job/income proof.
4. Limited Availability in Rural Areas
Most zero down schemes are offered in metro and tier-1 cities.
EMI Comparison Example (₹12 lakh Loan for 7 years)
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8.5% Interest: EMI ~ ₹19,041.
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9.5% Interest: EMI ~ ₹19,629.
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10.5% Interest: EMI ~ ₹20,228.
A 2% difference in rates can add ₹1 lakh+ extra cost over the loan period.
Who Should Choose Zero Down Payment Car Loans?
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First-Time Buyers: Without large savings.
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Young Professionals: With stable jobs but no upfront liquidity.
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Families Upgrading: Wanting premium SUVs or EVs without waiting.
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Urban Buyers: Benefiting from quick bank/NBFC approvals.
Tips Before Taking a Zero Down Payment Car Loan
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Check Your Credit Score: Higher score = lower interest rates.
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Compare Multiple Lenders: Don’t accept the first offer.
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Negotiate Processing Fees: Banks often waive them during festive periods.
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Use EMI Calculators: Plan affordability before signing.
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Read Fine Print: Check if accessories and insurance are fully covered.
Verdict: Is Zero Down Car Ownership Worth It in 2025?
The option of zero down payment cars in India is a big relief for buyers in September 2025. It eliminates upfront costs and enables quicker access to vehicles. However, it comes at the expense of higher EMIs and long-term interest outflow.
For salaried professionals and young buyers who want instant ownership, this is an excellent choice. But for those who can afford a down payment, a traditional loan saves money in the long run.
FAQs
What is a zero down payment car loan?
It’s a loan where the bank/NBFC finances the full on-road cost, so you don’t pay anything upfront.
Which banks offer zero down car loans in India?
Banks like SBI, HDFC, ICICI, Axis, and NBFCs like Bajaj Finance and Tata Capital offer these loans.
Are EMIs higher in zero down payment loans?
Yes, since 100% of the cost is financed, EMIs are higher.
Is it available for EVs?
Yes, many lenders now provide zero down schemes for EVs with special benefits.
Who is eligible for zero down loans?
Applicants with a good credit score (750+), stable income, and clean repayment history.