It is always recommendable not to take Vehicle Loan from your Dealer. Take loan separately from a banker.

This is basically for the misleading method of EMI calculation by the Dealers. A 1 Lac loan repayable in 3 years leads to an extra payment of Rs. 15,000/- approximately. You can understand the thing with the following example:

CAR LOAN OFFERED BY SHOWROOMS

As per Showroom’s Calculation
On Road Price A 1,00,000
Down Payment % 30%
Down Payment B 30,000
Loan Amount C = (A-B) 70,000
Rate 12.5%
Tenure (Yrs.) D 3
EMI -2,769
Actual Interest they are charging
On Road Price A 1,00,000
Down Payment % 30%
Down Payment B 30,000
Loan Amount C = (A-B) 70,000
Rate 12.5%
Tenure (Yrs.) D 3
Future value of the loan as if you are paying at the end E -99,668
EMI F = (E / D * 12) -2,769
Actual Calculation of RATE by Reducing Balance Method of EMI CHARGED 24.6%
Total Payment by you 99,668
Original Loan Amount 70,000
Interest Payment 29,668

Calculation as per Reducing Balance Method

On Road Price A 1,00,000
Down Payment % 30%
Down Payment B 30,000
Loan Amount C = (A-B) 70,000
Rate 12.5%
Tenure (Yrs.) D 3
EMI -2,342
Actual Calculation of RATE by Reducing Balance Method of EMI 12.5%
Total Payment by you 84,303
Original Loan Amount 70,000
Interest Payment 14,303
Excess Interest you are paying just because of lack of awareness 15,365

Now, just think,  if your loan amount is Rs. 10 Lacs, that means you are paying 1,53,650/- extra and so on.