Electric Vehicle Loan in India 2026: Everything You Need to Know

Last Updated : March 17, 2026, 4:11 p.m.

India's electric vehicle revolution is well underway. From Tata Nexon EV and Mahindra BE 6e to Ola S1 Pro and Ather 450X, more Indians than ever are switching to electric. And with EV loans now available at competitive interest rates along with government subsidies owning an electric vehicle in 2026 has never been more affordable.

If you are planning to buy an EV and need financing, this guide covers everything: best banks for EV loans, interest rates, FAME II subsidy benefits, eligibility, and a step-by-step application process.

Why Are EV Loans Different from Regular Car Loans?

EV loans and regular vehicle loans are structurally similar both are secured loans where the vehicle is the collateral. However, EV loans often come with special advantages:

1. Lower interest rates: Several banks and NBFCs offer preferential rates for EVs as part of their green lending initiatives
2. FAME II Subsidy: Government subsidies reduce the on-road price of eligible EVs, reducing your loan principal
3. State EV subsidies: States like Delhi, Maharashtra, Gujarat, and Tamil Nadu offer additional incentives that further reduce the cost
4. Tax benefits for businesses: Section 80EEB allows individuals purchasing EVs for personal use to claim deduction of up to ₹1.5 lakh on loan interest

Best EV Loan Interest Rates in India 2026

Good News: SBI's Green Car Loan offers one of the lowest interest rates in India for EV financing up to 20 basis points lower than their regular car loan rates.

EV Two-Wheeler Loan: Interest Rates & Eligibility

For electric scooters and bikes (Ola, Ather, TVS iQube, Hero Vida, Bajaj Chetak), EV two-wheeler loans are available from:

Many EV two-wheeler manufacturers also offer 0% EMI or manufacturer-subsidised loan schemes in partnership with NBFCs - worth checking at the dealership.

FAME II Subsidy: How It Reduces Your EV Loan Amount

The Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME II) scheme by the Government of India provides direct purchase subsidies for eligible EVs. This subsidy is applied at the time of purchase and directly reduces the on-road price which means a lower loan principal for you.

• Electric two-wheelers: Subsidy of ₹15,000 per kWh of battery capacity (capped at 40% of vehicle cost)
• Electric three-wheelers: Subsidies up to ₹50,000 per vehicle
• Electric buses and commercial vehicles: Higher subsidies for fleet operators

In addition to FAME II, PM E-Drive scheme launched in 2024 provides additional incentives for two-wheelers and three-wheelers.

Always verify the current subsidy status of the vehicle with your dealer, as scheme availability may have been updated.

Section 80EEB Tax Benefit on EV Loan

If you are an individual taking an EV loan for personal use , you can claim a deduction of up to ₹1.5 lakh per year on the interest paid under Section 80EEB of the Income Tax Act.

Conditions:

• Loan must be taken between April 1, 2019 and March 31, 2026 (confirm with your CA for 2026 updates)
• Loan must be from a bank or NBFC
• Vehicle must be a pure electric vehicle (not hybrid)
• Available only to individuals (not companies or firms)

This benefit effectively lowers your cost of borrowing - making an EV loan even more financially attractive.

EV Loan Eligibility Criteria

Make the Switch to Electric With the Right Loan

An EV is not just a vehicle - it is a smarter, greener, and increasingly cheaper way to travel. With competitive loan rates, government subsidies, and a growing network of charging infrastructure, 2026 is the best year yet to make the switch.

Wishfin helps you find the best EV loan for your needs - compare, calculate, and apply all in one place.