Buying a car, now, has become easier than ordering a home-delivered pizza. Banks today provide easy finance schemes where you can drive away with a car. But deciding on the right car finance is very challenging. You may be confused on which one is beneficial for you and might end up with one that has various "invisible" strings attached to it.

So here are a few things, we at paiisa.com think might help you in choosing the right car-financing option:

The first thing you need to know, before availing for car loan, is the type of car you want and see if it suits your estimated budget. Narrow your choice of cars, to two or three. Compare rates of all banks and get their best rates. Also ask for recommended dealers for the car(s) of your choice to see which dealer is giving you the best deal.

You apply for a loan and you buy a car. You go to a bank and fill out some forms and they disburse your check. Sounds simple enough, doesn't it?

However, your application could be denied or cancelled, or you may get an offer at a high interest rate if you have bad-credit history. All banks go through your financial history when you apply for a loan. Different banks have different standards of judging a credit history. So it is wise to clear up all old debts, if you have any, before you apply for a loan. This will help you get your loan approved at lower interest rates.

You repay the loan in equated monthly installments (EMIs), comprising of principal amount and the Interest Rate. The EMI depends upon the loan amount, the interest rate and the tenure of the loan.

>Also don't just evaluate the deal based on monthly EMIs. Calculate how much you will be paying over the tenure of the loan. This in turn is a function of Interest rates.

The interest rate depends on the Flat Rate and Reducing Balance method. In the Flat Rate of interest, the principal amount (on which interest calculations are made) remains same for the entire tenure of the loan. The total interest is divided over the number of installments to derive the EMI.

Reducing Balance, means reducing the paid-up principal amount (on which interest calculations are made) from the outstanding loan amount. The interest you pay is calculated on outstanding principal balance.

Car loans typically don't require a guarantor but if your income does not meet the credit criteria, then you will be required to have a guarantor for your loan. Guarantor can be your spouse, if employed, or a third party guarantee will do.

Processing fees is a one-time charge taken for processing and legal paperwork. At the beginning of the period, the bank requires you to pay 2-4 percent of the loan amount as processing fees. For example, if you take Rs.5 lac at 15% for 5 years (60 EMIS) and charges you 2 percent as processing fees, you are in effect paying an amount of Rs.10,000.

If you chose to pay up your entire money before the tenure, a Pre-payment penalty is charged. So know about such penalties before-hand to avoid future misunderstanding between you and the bank.

Also keep in mind that most banks offer you the option of pre-payment, but they do not give the flexibility of part-payment.

You "have-to" insure your car. It is against the law to drive an uninsured car. You must get an insurance policy for a year's duration, after which you have to renew it. The amount of insurance is equal to the market value of the vehicle and not the book value of the vehicle.

The premium is added to the EMI paid for the loan tenure and you are insured for the amount you have taken, incase something unexpected happens Assured amount will be given to the bank without burdening the members of the family.

So keep these few things in mind while financing your next car !You have reached the best spot to get the best loan, for your car, from the best banks. Go, fill the application form now!