0% Car Finance – What’s The Catch? – Aussie Car Loans

0% Car Finance – What’s The Catch?

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Recently many car companies have been offering zero per cent car finance rates on new vehicles. But is it such a good deal?
If car dealers are not charging interest on their finance deals they will have to make up the difference in other ways.

One way is through price. If you walk into the showroom wanting the zero per cent finance deal the price of the car will often be non-negotiable so you’ll be paying full retail whereas you can almost certainly negotiate a better price when not asking for zero per cent finance.

Another way they make up the shortfall is through trade in value, so if you’re looking to trade in your old vehicle and get a zero per cent finance deal to expect a much lower price on the trade in.

The final area that could be affected is loan flexibility. The structure of the finance such as the term of the deal, balloon payments etc. will be less flexible if you’re seeking a zero per cent finance deal.

So you’ve been warned, you can end up paying more for your new car than if you had shopped around and maybe even financed your new wheels through an independent broker like Aussie Car Loans.

Recently many car companies have been offering low-interest car loans, such as 1% car finance or 0% interest car finance on new vehicles. These new car finance deals may sound like a great deal, but is it?

The main manufacturers like Toyota, Holden, Ford and Nissan all offer these deals. But be warned! You may well end up paying more for your new car than if you had shopped around and (maybe even) financed your new wheels through an independent broker like Aussie Car Loans.

Why Shouldn’t I Take Advantage Of A 0% Car Loan?

Well, if car dealers are not charging interest on their finance deals, they have to make up the difference in other ways. In fact, there are lots of ways they can do this that you need to be aware of.

1.The Price

If you walk into the showroom and ask for the 0% car finance deal, the price is often not negotiable – you’re paying full retail. You can almost certainly negotiate a better price with the dealer if you’re not asking for the 0% finance option.

2. Trade In Value

If you’re trading in your old vehicle you’re likely to be offered a much lower price.

3. Loan Flexibility

The structure of the finance is also likely to be less flexible (term of the deal, balloon payments etc).

Okay, But What About “Guaranteed Price On Future Trade-In”?

Another option offered by some dealers is a “guaranteed price at future trade-in” against your next new car. From a psychological (and sales) point of view, this is the same as locking you into buying your next car from them as well – very clever!

Again, the problem is that the cost of offering this guaranteed buyback price is generally an upfront loading to the cost of the car. And often these deals come with restrictions that may preclude you from taking up the offer anyway when it comes time to upgrade.

Do Your Homework & Save $$

It’s important that you have done your homework on car values before you go into the dealership. You need to have a clear idea of the value of your current vehicle if trading it in, as well as the price you should be paying for your new car. Half an hour researching car prices on a few of the online car sales sites will pay dividends here.

You can also use our car finance calculator to get an idea of your repayments and the current comparison rate to better inform yourself about what a standard finance arrangement might cost you.

Also shop around for car finance deals and get quotes from a finance broker (like us) before going into the showroom. At least if you do decide to take the 0% car finance option, you will have done so having taken all factors into account.

For more information, you can talk to us about car finance to make sure you’re putting the best foot forward.

Get a “real” car finance deal. let us find you the best possible interest rate by giving us a call (1300 769 999) or by filling out an application online.

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