0% Car Finance – the truth about 0-1% finance on new cars
It’s a rule that’s probably buried somewhere in Donald Trump’s bile-filled Art of the Deal, if you can bear to read his books – “anything that sounds too good to be true, almost certainly is”.
So if you’ve seen an advertisement promising “0% interest”, “0% car finance”, or even the slightly less-generous sounding “1% finance car deals”, immediately grab your reading glasses and prepare to start scouring the fine print.
Because the fact is that 0% finance new cars can actually be more expensive to buy than the same car bought with a standard finance interest rate.
When you see an offer like “Toyota 0% financing”, it sounds like a hell of a deal, but that’s what it’s designed to sound like. Basically it’s all about getting you into the showroom.
What you need to look at is the bottom line, and the math here is fairly simple. If you can buy a car with a normal finance deal, at say 8.0 per cent, for $19,990, that’s still going to be cheaper than buying one at 0 per cent if that same car costs $24,990 under your “special” 0 per cent deal.
Because this is what car companies will sometimes do, basically as a way of recouping the cost of offering you “BMW 0% finance”, for example. They give you the low rate, but bump up the price of the car, or add on extra fees, delivery costs and charges. Again, it’s all about reading the fine print.