Electric Vehicle (EV) Loans in India — The 2025 Field Guide
This guidebook outlines – in plain and practical language – how EV loans are handled in India in 2025: who can (and can’t) borrow, how much one will pay in rates and tenures, what documentation lenders need, repayment options, how subsidies change the economics, and which lenders to explore first. I emphasize actual numbers and actual program features whenever I can, and conclude with a practical checklist so you can apply and compare easily.
Executive summary (snapshot)
- Major banks operate specialist “green”/EV loan schemes these days that frequently comprise minor rate discounts, larger loan-to-value (LTV) ratios, and longer loan terms than before. In fact, Most promote up to 100% on-road finance for qualified EVs.
- Standard prime retail EV car-loan rates (mid-2025) for high-quality borrowers are around in the range of high-8s to low-9s % p.a.At large banks, two-wheeler and fleet financing through NBFCs and fintechs tends to be more expensive and not very similar in terms of terms and conditions.
- Central purchase incentives for EV vehicles are inactive (FAME-II expired March 31, 2024; newer central programs aim at infrastructure and focused segments). State incentives (road-tax/registration exemptions, random cash subsidies) continue to be significant and can significantly reduce the amount financed.
- Tax relief (Section 80EEB) for EV-loan interest was restricted to loans approved until Mar 31, 2023 — unavailable for fresh loans today. Check the latest tax bulletins with your Chartered Accountant always.
Who's eligible? (borrower & vehicle essentials)
Eligibility depends on the lender, but there are some common factors to consider:
Borrower
- Salaried, self-employed, proprietor/partnership/LLP, or company taking a loan to purchase an EV. Normal age range: 21 to ~70 years at loan expiry (banks may vary).
- Minimum income and time in business requirements (usually 1 to 2 years of steady income or business history).
- Therefore, A credit score is important. Banks want 720–750+ for the best rates; approvals at lower scores with higher rates or tighter LTV are possible.
Vehicle
- All banks finance new, road-worthy battery electric vehicles (4W and 2W) bought from approved dealers. A battery guarantee and OEM certification can increase the lender’s confidence.
- Lenders differ on vehicle age limits (applicable for certified pre-owned EVs); banks concentrate on new retail EVs, whereas NBFCs/fintechs are more accommodating in used/2W/fleet cases
Interest rates, tenors and LTV: realistic aspirations
Rates (representative mid-2025):
- Prime retail EV car loans (large banks): around ~8.5%–10% p.a. for good borrowers; banks are operating EV “green” program cards with minimal concessions compared to ICE car loans.
- EV two-wheelers / informal-income segments: broader spread — often 11%–25%+ depending on the lender, ticket size and documentation. Consequently, NBFCs and fintechs may charge higher rates for borrowers with lower credit scores.
Tenure
- Cars: many bank EV products allow longer tenures — typically 3 to 8 years (SBI’s green car loan explicitly lists 3–8 years). However, Longer tenures reduce EMI pressure but raise total interest.
- Two-wheelers: tenures are usually shorter (12–36 months are common).
LTV (Loan-to-Value)
- Lenders can fund 70–100% of the on-road price, based on profile and program. Some banks promote up to 100% on-road financing for EVs (on eligibility). Flexi LTV by NBFCs should be anticipated by fleet/gig customers at a higher cost
Practical note: a 0.5–2% variation in interest can translate to several tens of thousands of rupees over usual car loan tenures — always compare the all-in APR (interest + fees) and not simply “headline” rate.
What documents will lenders request?
Standard KYC & income:
- PAN, Aadhaar (or passport/voter ID/driving licence).
- Salaried: salary slips of last 3 months, employer information, bank statements of last 6–12 months, Form-16 (if asked).
- Self-employed: last 2 years’ ITRs, audited P&L/Balance Sheet (if applicable), GST returns, and 6–12 months’ bank statements.
Vehicle & transaction docs:
- You need a proforma invoice or booking receipt from an authorized electric vehicle dealer.
- Quotation for insurance (some lenders ask to confirm comprehensive cover).
- If a trade-in is involved or an old vehicle is being scrapped, the relevant RC/transfer/scrappage docs.
Optional / program-specific:
- Proof of subsidy/waiver eligibility (state incentive forms).
- Documents for charger installation (if you’re financing the charger and accessories).
Additionally, Banks and NBFCs issue product checklists — use the lender’s checklist to prevent last-minute delays.
Repayment flexibility & options
- Normal EMI (monthly) on reducing balance is the default.
- Part-prepayment: permitted by most lenders after a first lock-in (typically 6–12 months); charges vary (0%–3% in initial years). Verify the sanction letter.
- Foreclosure: policies vary — some banks permit zero foreclosure after a fixed duration Similarly, NBFCs may charge higher fees.
- Structured options: step-up EMIs, balloon/residual payments, and fleet-specific seasonal repayment profiles are available but are niche and negotiated.
- Insurance + EMI protection: lenders typically have loan protection or credit insurance on offer; it’s optional but is definitely worth considering for job-loss or disability cover
Government incentives and how they impact loans
Central level (2025):
- FAME-II (applicable to the previous period) ended in March 2024; newer central schemes target charging facilities and specific segments instead of across-the-board passenger EV purchase subsidies. Therefore, Don’t expect a central automobile purchase subsidy — verify ongoing MoHI notifications when purchasing.
- Section 80EEB tax relief (interest on EV loan) for loans approved between Apr 1, 2019, and Mar 31, 2023; not for new loans approved after the said date. Take advice from your tax consultant for legacy claims.
State incentives (relevant to buyers):
- Many states still provide waivers of road tax and registration fees, lowered tolls, or cash incentives to specific EV segments. For example, Maharashtra’s EV policy (2025) offers a 100% waiver on motor vehicle tax and registration fees, along with other benefits for registered electric vehicles (check for the latest policy updates to confirm relevance). These waivers lower the on-road cost (and hence the financed value/EMI).
Financing effect: If your lender can provide 100% on-road finance, state waivers merely decrease the amount you borrow (good). If lender LTV is pre-waiver price, check whether the waiver is valued before it.
Who are the self-evident lenders to inspect (and why)
Large public & private banks (best for prime salaried/self-employed borrowers):
- SBI’s Green Car Loan is for electric vehicles, offers special prices, and provides full on-road financing. You can get loans for up to 8 years.
- Suitable for salaried customers with relationship banking.
- HDFC Bank (EV Car Loan): online experience, long tenors (max 96 months in product pages) and extensive dealer tie-ups — check charges and prepayment conditions.
- ICICI Bank: offers 100% finance and competitive rates for qualified EVs with rapid digital disbursal.
Captive finance & NBFCs (OEM deals / fleet / flexible structures):
- OEM captives and big NBFCs tend to include insurance/AMC and offer flexible terms for fleet or gig customers; they disburse quickly and can finance chargers or battery-service plans.
Fintech & specialised EV lenders (2W/3W/gig/fleet):
- Fintechs and small NBFCs insure credit-thin borrowers with telematics, dynamic underwriting, and increased APRs — best for e-rickshaw drivers, last-mile fleets, and small operators.
How to select the optimal offer (comparison checklist)
- APR includes interest, processing fees, and other regular charges, all calculated on an annual basis.
- Verify LTV and valuation rules. Verify lender valuation on the basis of post-waiver on-road price if feasible.
- Consider lock-in / prepayment charges. Prepayment at an early stage saves a significant amount of interest — opt for lenders who have low/zero post-lock-in foreclosure fees.
- HDFC Bank
- Check EMI elasticity and moratorium policies (for a small fleet with seasonality).
- Clarify inclusion/exclusion of charger and accessories in the amount financed (if you wish to finance installation).
- Evaluate after-sales support and repossession language for telemetry-linked financing (widespread with fintechs).
Typical pitfalls & traps to avoid
- Over-borrowing due to a lender providing 100% financing — if you are paying for accessories and on-road price, you might end up with negative equity at resale.
- Neglecting total cost vs EMI — an extended tenure can reduce EMIs but increase total interest steeply.
- Counting on central subsidies paying bills — FAME-II has expired, and newer central schemes are focused on; depend on state incentives where possible.
- Press Information Bureau
- Not affirming battery warranty treatment in resale or repossession (battery being the most valuable component of an EV). Preserve OEM battery health records.
Worked example (illustrative)
- Road price after state waiver: ₹15.00 lakh.
- Down payment: 10% (₹1.5 lakh) → loan = ₹13.5 lakh.
- Rate: 9.0% p.a., term 7 years (84 months).
- Approx EMI: ₹21.7k; total interest ≈ ₹5.7 lakh during term.
- Optimization: two ₹50k part-prepayments in Years 1 & 2 save interest ~₹45–55k and reduce tenure. (Actual numbers subject to lender amortisation regulations.)
Step-by-step working plan to secure the best EV loan
- Before applying, get your credit report and make sure your score is above 720.
- Check the car’s value, including state benefits and 5% GST, but make sure to look up the GST rate for higher-end models.
- Shortlist 3 lenders (salary bank + 2 big banks/NBFCs) and apply for EV-program quotes (soft pulls wherever applicable).
- Shortlist based on APRs and LTV assumptions, not just on EMI.
- Gather your documents like KYC, three months of salary slips, or two income tax returns, and a pro-forma invoice.
- Obtain a sanction letter in writing with all costs clearly spelled out.
- Establish an e-mandate, think about loan protection insurance, and arrange part-prepayments in early years.
Last takeaways
- For prime customers, bank EV schemes (SBI/HDFC/ICICI and so on) are competitive — cross-check the all-in APR and LTV.
- For 2W/3W, gig and fleet customers, NBFCs and fintechs provide speed and flexibility at higher APRs; model your cash flows and total cost conservatively.
- Finally, Don’t rely on central purchase subsidies for vehicles — count on state waivers and GST benefits where available. Check local incentives prior to committing to a deal.
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