The new car loan rates also depend upon the type of loan that you are looking for. Basically, there are two types of loans - secured and unsecured. For getting a secured loan, you need to offer some asset as security and then you'll get a low rate of interest, as the risk factor will diminish. For unsecured loans, no asset is put up as collateral and as such the interest rate of the loan is high. However, in the case of car loans, the car itself is the security and most lenders hold on to the papers of the car till the loan is fully liquidated. This enables them to feel secure and offer competitive rates.

Your credit history plays an vital part in determining interest rates, but if you have a bad credit history, do not worry. There are many firms who offer poor credit auto loans. Many online car lenders make it possible for individuals to buy a car with bad credit. It is true that they will have to pay a higher interest rate than the prime interest rate purchaser.

The maximum amount financed for used cars vary from 80-90% of the car's value. If your income is not sufficient to get the loan amount that you want, you could club your spouse's or relative's income along with yours to get a higher loan amount.

The self-employed can get tax relief on the interest paid for the car loan (approximately 15 per cent). Also, depreciation to the tune of 10 per cent per annum can be claimed depending on the price of the car.

Now that you have answered the above, you know whether you want a new or an old car. But before you go for that old car, get yourself a cool car mechanic that is, a trustworthy one who will check the car for you. Ask him to check all the parameters like tyres, suspension, cooling etc.

Registration certificate book (RC) - You need to see whether the name of the state has been mentioned in the book. The RC book also contains a lot of intricate details about the car. This includes the engine number, chassis number, manufacturing date etc.

Yearly - In this method, the principal is reduced finally, at the end of each year. This effectively implies that though you have paid back a part of the loan during the year, the principal outstanding gets reduced only at the end of the year.

Motor Policy B: The premiums of this "comprehensive insurance" are much higher than those paid for regular insurance cover. This type of policy covers both third party insurance and own damage liability. Covered under this policy are:

The policy holder can claim a 20%, 35%, 50% and 65% discount in the premium in the first, second, third and fourth year of holding the policy. NCB cannot be claimed in the 5th year premium. The discount is based upon the claim that he has lodged with the company. Besides this, NCB is important when you are buying another new car because you can transfer this record (clean claim period) to your new vehicle.

The other factor is prepayment charge. In the case of home loans this tends to be around 2% of the amount pre-paid. So if the interest rates have dropped a lot and the bank has withheld giving you the benefit by changing only the mark up you can always threaten to shift your home loan and force the bank to pass on the benefit to you as well. In the case of car loans the prepayment charge is as high as 5%. Hence you are more or less locked in to your existing lender.