0% Finance, What’s the Catch?

Why do dealers offer 0% Finance?

When it comes to buying a new car, the chances are that most people will feel pretty spoilt for choice. First of all, there’s the sheer variety of stockists – and that’s before you even consider turning to the web to really get to grips with what’s available. But there’s one particular aspect of buying a vehicle that plenty find appealing; and that’s the potential of 0% finance.

But what exactly does this mean and how could it affect you? Is it simply a ploy to get people to pick a specific company, or could it actually offer rewards that you won’t find elsewhere? In many instances, an agency might simply want to clear their less popular stock – and as you’ll undoubtedly be able to tell already, a little extra effort on your part can certainly help to separate the men from the boys as far as deals go.

What can you do to get off to a flying start?

First and foremost it’s important to remember that cars are cars. If two of the same car are sold from different sellers with all of the same specifications, then why should you pay more for one of them? Comparing quotes and evaluating key benefits can be a huge advantage – and that’s why it can be important to pay special attention to specific factors. These often include:

  • The purchase price of the vehicle itself. Have you found the same model listed elsewhere for less or more – and if so, why might that be?
  • Delivery fees; especially if the showroom or seller can take care of transporting the car to your driveway
  • What is the residual value of the vehicle? Can you expect it to depreciate over time and with usage – and if so, by how much when compared to another model?
  • Finance rates. These can be especially important if you’re keen to enjoy the lowest costs when it comes to repaying what you borrow
  • Trade-in value of your old or current car; especially if you can enjoy a lower cost for your new car by using your existing vehicle as a trade in.

With these things in mind, you’ll already be putting yourself in a position to see-through schemes and marketing ploys, but they aren’t all that you should be concerned about. It can pay to be aware of the price listed for the vehicle, even if it does feature 0% finance. To receive the financing benefits, most sellers won’t be willing to negotiate on the cost of the car as listed.

Then there’s the fact that only a selection of vehicles might be made available; limiting your choice of car in the process. And as base models will often be promoted with these options, you’ll typically find that the trade-in value could be lower should you wish to upgrade in the future. You might also find that balloon payments or residual payments may be restricted. You may find that there is a restriction on how long you have the loan for. With 0% finance, you may find that you have to repay what you owe in just 2 years rather than having an option of repaying your loan over 5 years.

Other things to be aware of

And what about those of you that manage to secure a guaranteed price for your future trade-in?

This might sound appealing at first, but what if the small print of your contract states that you can’t use the vehicle to upgrade to another, or if it features other restrictions? And this scenario may be made all the worse when you realise that you may have paid a higher price for the vehicle in the first place, as well as an increase in delivery fees.

So, what can you do from here?

The first bit of advice that we can give is to ensure that you shop around. Research car values before heading into a dealership and once you’re there, be sure to explore your options – especially if they throw around the term 0% finance.

In all cases, the right type of loan will typically be one that provides the smallest total repayment over the entire term of the plan – and as long as you keep that in mind, you’ll already be bounds ahead of others in your position.

Apply for a car loan with us today!

Disclaimer -This page/article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.

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Email – info@awesomecar.loans