Planning to take a car loan? Pay the maximum down payment you can afford

This will help you reduce your interest outgo over the total tenure

• Try to limit the loan to an amount such that the EMI does not exceed 15-20 per cent of your take-home salary. 
• Remember that you would have other loans also and the EMIs of all of them should together not exceed 50 per cent of your take-home salary.
• The car loans available within the dealer's premises may not be the most attractive. Scout around for better deals on your own despite pressure from the dealer to take a loan from one of his lender partners.
• Many public sector banks offer attractive interest rates (see table) starting at below 9 per cent.
• Pay the maximum down payment you can afford. 
• This will reduce your interest cost over the tenure of the loan. It will also allow you to opt for a lower tenure or lower EMI.
• Use online tools to compare car loan rates.
• Keep in mind the foreclosure charge. If it is high, you will have difficulty in closing your loan early.
• Business owners can deduct the interest paid on a car loan when filing their tax returns. Salaried people do not enjoy this benefit. 
• Sometimes, you can get a better deal if you approach a bank towards the end of the month, when they have their monthly target to meet.