For most Indians, buying a car comes second only to the dream of owning a house. With the arrival of easy financing of car purchase by banks, this dream is becoming a reality for many. The decision to buy a car is, very often, prodded by the promise of easy financing that car dealers advertise.

"Do not compromise, you can now own a Toyota Corolla for as little as Rs 10,000 a month," says an advertisement, egging you on with monthly spare-money of Rs 10,000. The mathematics of this foxes the prospective buyer. Is it real?

You decide to check with the dealer. You find the offer is real, but the initial lumpsum payment would be large. Okay, you say to yourself. I'll manage that. But what is the interest rate for the loan? The dealer tells you it is 11 per cent and you wonder why it is cheaper than a home loan. You prod further and discover that this is really in lieu of cash discount you could otherwise have got. You are no longer sure whether to believe him or not.

You are not to blame. Car finance can become complex because of the financing deal between the car dealer and the bank. Here are some pointers that will help you negotiate better:

1. Finalise your decision on the car you want to buy. The interest rates vary from one car to another so what is available on one car may not be available on another.

2. Fix the amount of loan you need. Suppose the car costs Rs 800,000 on the road and if you are ready to make a down payment of Rs 200,000 then freeze your loan requirements at Rs 600,000. Interest rates that you get also depend on the loan amount.

3. Ask around for preliminary quotes for the given loan amount for the given car. Freeze on the lowest equated monthly instalments that are offered.

4. Now negotiate on the processing fees. Most times the fee can be waived.

5. Then start negotiating for cash discounts that can be adjusted against your down payment. The direct selling agents or dealers will offer to reduce the EMI but resist the temptation, and insist on a cash discount. Also the dealer or DSA will offer accessories in lieu of a cash discount, which you should again resist and insist on the cash discount.

6. Once you find that the cash discount limit has been reached then you can try for a small freebie on car accessories such as car mats, boot mats etc.

7. Remember to claim your no-claim bonus on the insurance policy for the new car if you have a claim-free record on your existing old car.

Happy driving.

The writer is CEO, www.apnaloan.com