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Government lender Bank of Baroda (BoB) on Monday announced a 0.30 percent reduction in interest rates on its car loans. The new rates have come into effect with immediate effect. The decision by the bank to cut car loan interest rates comes after the Reserve Bank of India (RBI) kept the repo rate unchanged in its Monetary Policy Committee (MPC) meeting on Friday (February 6, 2026). Although the RBI maintained status quo, it is quite likely that the Bank of Banks (BoB) will cut interest rates on its floating car loans due to the earlier repo rate cut. RBI had cut the repo rate by 125 basis points (bps) in the year 2025.

Bank announced new interest rates

The bank said in a statement that its floating interest rate will now start from 7.6 percent per annum. Additionally, Bank of Baroda is also offering attractive fixed interest rates on car loans, starting from 8.5 percent per annum. According to the statement, an initial interest rate of 7.6 percent will be available on the purchase of a new car and will be linked to the credit profile (CIBIL score etc.) of the borrower. The special thing is that after the announcement of RBI's repo rate, BOB has joined the list of those few banks which have cut their interest rates.

Key Features of Bank of Baroda Car Loan

1. Floating interest rate car loans starting from 7.60% per annum
2. Fixed interest rate car loans starting from 8.50% per annum
3. No prepayment/part payment charges on floating interest rate for individuals
4. Interest is calculated based on Daily Reducing Balance method
5. Customers can also avail extended repayment tenure up to 84 months
6. Baroda Digital Car Loans are available with instant approval in just a few steps

The bank is giving them big relief

Along with the reduction in interest rates, the bank is giving relief to individual borrowers from the charges on prepayment or partial payment on floating rate car loans. The bank said that the interest on Baroda Car Loan (both fixed and variable) is calculated on the basis of 'Daily Reducing Balance' method, which makes it more affordable for the customers. Customers can also avail extended repayment tenure of up to 84 months, giving them greater payment flexibility. A car loan can be availed through Bob World App, a digital lending platform available on the Bank of Baroda website or by visiting any Bank of Baroda branch across the country.