[csentil]

Ok ! Have they asked you for 1 month prepayment of EMI?

Have you been offered any discount on the car. If not, the discount has probably been passed on to the financing bank and you would be getting a lesser rate of interest. Was this bank suggested by the dealer itself?

5% prepayment penalty is the norm. One of the reasons for giving lesser rate of interest is that you will pay the EMI for the entire tenure thus helping the bank make more money than when you preclose.

Find out if there is partial prepayment. Some banks have it, some don't.

Its also a good idea to directly approach other banks and see what kind of deal they have. Government banks sometimes have good deals except that the paperwork process and loan disbursement may take a tad longer.