Is a Zero percent deal that great?
Zero percent financing sounds great, but as with so many things, there are often strings hidden in the deal that could end up costing you money.
Think about it: The car financing company isn’t really lending you money for free. It would go out of business pretty quick if that were the case.
The zero percent deal is usually offered through the manufacturer’s finance arm, and is a marketing strategy. Even so, when you are paying no interest, the company has more of an incentive to make up the lost profit in other areas. In other words, you may get the sweetheart zero percent financing deal, but find it difficult, or even impossible, to negotiate a better price and the financing is often limited to a particular spec and possibly even a colour. Great, if it is what you really wanted.
These rates are also generally reserved for customers with nearly flawless credit. Your average buyer may well find that once they get in the door, they don’t qualify. But at that point, the dealer already has them on the hook.
On most occasions, it is almost always cheaper to negotiate a great discount on the price of a new car, and arrange the most affordable independent finance available in the market place.
There are other hidden catches sometimes tied to zero percent deals that could end up costing you money, including fixed servicing requirements, along with insurance and warranty clauses. Make sure you read and understand all the fine print before signing on the dotted line.
Simply put: buyer beware.
As a general rule, you will probably be better off negotiating the best deal at the dealership and then securing your own financing. A simple rule of thumb is to compartmentalise your car buying experience.
- Buy from the dealer.
- Get your own financing.
- Sell your car old car independently.
Give us a call on 1300 252 088 to discuss your car financing requirements.