The Truth About 0% Car Finance

When it comes to car financing, it’s next to impossible to find a truly 0% car finance. Though these offers may sound great, it is vital you read the terms and conditions carefully, as it’s probable you will be paying additional fees and charges somewhere along the way. This is especially true if the official cash rate is above zero, and other lenders are charging more, so it’s up to you to find out where the additional charges in any 0% loan lie.

Eye catching offers

Once a buyer walks in to a showroom, half the battle is over for car dealers looking to secure a sale. This is why 0% offers are effective, as they gain attention and get people into showrooms. This is the same reason these sales are often advertised as being for a limited time only.

Less price flexibility

While 0% car financing sounds great in theory, the reality is the deal won’t be entirely interest free. The difference is instead of paying the cost of interest over a series of repayments, it is factored in to the advertised sale price of the car. For this reason, dealers advertising 0% financing deals often can’t afford to be flexible on their prices, nor generous with their trade in offers.

Higher servicing costs

0% deals are usually only advertised for new cars, so take into consideration you will likely be required to have the vehicle serviced at the dealer in regular intervals (or you may risk voiding your warranty). These service prices will often be much higher than what you’d pay at an independent mechanic’s.

Stop, compare, be informed

Researching the market value of a vehicle you pan to trade in is key in getting a good deal on your next car. Doing your homework will mean you enter price negotiations with a fair figure in mind, and will help you avoid being pressured into an on the spot purchase.