This is one advise car buyers should heed very seriously. Bankers believe that it is in the best interest of customers not to take a 100% loan for their cars. Many times this proposition seems very tempting, especially when one is exchanging an old car for a new model. However, bankers believe no matter what the interest rate, high or low, it is always better to pay 20-25% of the total car cost as cash down payment.

It is very important as it gives car owners a realistic sense of how their monthly instalments will work out. In addition, it also makes car costs fit ones pockets.

Many times car owners decide to reduce their term loan. However, bankers have a word of caution for this: This might work for small cars, but not for big one. This is because bigger cars generally carry a bigger monthly instalment bracket with them. For owners of bigger cars, an inability to pay a higher monthly instalment can put them in the defaulters list. These days, with high interest rates, every bank keeps a thorough check on defaulters. Even if it means one or two of your cheques have bounced, this puts you on the red-inked defaulters list, warn bankers. This affects the individual’s chances in getting future loans in any segment from that bank.

"A simple mistake or carelessness can destroy your chance of getting another decent loan," said a senior bank executive. Hence, a consumer must think twice before reducing a 3-4 year loan to a 2 years period as it might disrupt the monthly payment.