1. Decide which car you would like to buy and do not let the salesman decide that for you. First shop for your dream car and then arrange for finance. You might not get your dream car if you try to buy within budget as the salesman will hand you his choice of car.
2 Spend enough time shopping for the best deal. Compare various brands of car in the same categories. Once you have zeroed on your dream car, then check out finances. Compare prices, check loan EMI offered by various banks or the car companies. Include total cost like registration, tax, nameplate cost etc while working your finances.
3. Opt for good car and not car that is hot: Do not get carried away by marketing and advertisements of latest car models that are considered hot. You want good car to be used on a regular basis and not hot car which might not meet you needs. Do not buy car which is in waitlist as it will involve inflated cost.
4. Keep an eye on net cost. If you are trading your old car for new, buy new car at the lowest and sell old at the highest. It is easier said than done as the dealer mostly likely would do the opposite. Try somewhere else or sell you old car first and then buy a new one.
5. If a dealer is trying to lure you with free seat covers, stereo etc, ask him to give you cash discount as most of these freebies are likely to be of poor quality.