Top Tips for Getting the Best Car Loan Deal and Saving Money

Author: Nikhil Ramchandani •Published on: 9/14/2025•5 min
Overview:Thinking of buying a new car? It’s definitely an exciting milestone! Have you considered taking out a car loan to finance it? Many buyers focus only on the car, but even a small difference in interest rates or processing fees can cost you thousands over time. That’s why it pays to plan smart, compare your options, and lock in the best car loan deal to maximise your savings. Want to know more about how to save money for a car without the burden of paying high EMIs? Here are our top tips for getting the best car loan deal and making the most of your loan.
Share this article
Article cover

Tip #1: Maintain a Healthy Credit Score


Before approaching a lender, make sure you have a high credit score (CIBIL score). Generally, a CIBIL score above 750 reflects your excellent creditworthiness. A high CIBIL score helps you secure quick approvals and better loan terms. Based on this, you can also negotiate the interest rate.


Tip #2: Negotiate the Car’s Price


Negotiating the car's price before discussing finance options will lower the loan amount. 



  • Compare quotations from different dealerships and get the best deal for you.

  • Ask for cash discounts, exchange bonus, free accessories and corporate benefits. 

  • Avoid unnecessary add-ons, like paint protection and extended warranties, that increase the loan amount. 

  • Check if the dealer isn’t imposing a higher interest rate to increase their profit margin.

Tip #3: Bargain With Your Lender


Loan terms are negotiable. So, if you have a high credit score and a stable income source, you can ask for a lower interest rate, a waiver of documentation charges & processing fees, and better terms in the event of foreclosure. 


Tip #4: Compare Interest Rates


Don’t accept the first loan offer you receive. Compare interest rates, processing fees, and loan foreclosure charges across different banks and NBFCs to make an informed decision. Find the lowest possible rate of interest so that you can save your money.



  • Generally, public sector banks offer lower interest rates than private sector banks, especially for government-salaried employees. 
  • Check for zero or minimal foreclosure charges.
  • If your credit score is low, getting a co-signer with a good credit score can help you secure a lower rate. 

Tip #5: Opt For a Shorter Loan Tenure


The longer the loan tenure, the higher the interest you pay. Always opt for the shortest loan tenure to keep the interest on your loan to a minimum. However, this will result in higher EMIs. So, prepare yourself for this if you want to save on your car loan amount. 


  • Prepare for your purchase in advance. 
  • Calculate the maximum loan amount you need and estimate your repayment plan according to your budget. Use online car loan EMI calculator tools to get a clear picture of your monthly payout.
  • Don’t forget to add the insurance amount and RTO charges to your final amount. 
  • Avoid emotional purchases.
  • Try to repay your loan amount within five years. 

Tip #6: Put Down a Higher Down Payment


Generally, most financial institutions provide loans of up to 90% of the on-road price of the car, with the borrower required to pay the remaining 10% as margin. However, aiming for a higher down payment will reduce the loan amount and also fetch better interest rates, ultimately leading to savings.


Tip #7: Plan Your Purchase Smartly


Interest rates on car loans are generally lower around the festive season or at the end of a financial year. This is generally to meet their sales targets. Some lenders, especially dealer-tied-up bodies, offer reduced processing fees these days, along with lower interest rates and free accessories. 


Tip #8: Say No to EMI Holiday Schemes


Many carmakers and financiers offer EMI holiday schemes, allowing buyers to start paying their loans after a specified period. While it may sound appealing, it often increases the overall loan cost in the long run because the interest continues to accumulate. 


Plan Smart Today, Drive Stress-Free Tomorrow 


Buying a car is one of the most important financial decisions for many, so don't let strategic errors ruin your experience. With the above-mentioned expert-backed tips, make an informed decision to save thousands over the years. Always compare loan offers, read the term sheet, utilise online tools, and strike the right balance between EMI affordability and total payout.


FAQs


1. Which bank offers the lowest interest rate on car loans?

Generally, public sector banks like SBI and PNB often offer lower interest rates than some private sector banks.


2. What factors can affect the interest rate?

The interest rate on a loan may vary based on your credit history, financial stability, total down payment amount, and your negotiation skills.


3. Can I foreclose a car loan before the tenure ends?

Yes, you can foreclose your loan amount before the tenure ends. However, it may attract some foreclosure charges in a specific period of your loan tenure.