The opening of the economy has brought car buyers a plethora of models to choose from. Having decided the car to buy, buyers also have to decide whether to fund it from their own resources or through car finance.

The various players offering car finance schemes can be categorized under two broad heads namely -

* Banks
* Non Banking Finance Companies (NBFC).

Usually Banks have an advantage in sourcing cheaper funds and are hence able to offer better rates of interest than NBFCs.

Several of the financiers have tied up with manufacturers to offer competitive finance scheme on the respective manufacturers' products. It is through tie-ups like these that manufacturers pass discounts to the end customer that finally translate into a lower instalment payments.

Most retail banks and leading financial institutions offer car finance schemes. Interest rates vary from 15% to 17%. But remember - these rates are only indicative to give you a flavour of the market. A bit of negotiation can help you reduce interest rates by as much as 2%! Some hard bargaining and leveraging your banking
relationships can go a long way .

Car finance schemes have evolved with changing needs and market solutions. Aggressive marketing with special offers, discounts, low interest rates, packaging, easy eligibility, fast turnaround of applications, have all contributed to making car finance a preferred option to own funds. Even for those who are able to make a full payment should check a financing option before taking the final decision.

Now that you have decided to avail a finance scheme for your car, the next step is to select the scheme that suits you the best.