If you’re browsing car sales you’ve likely come across advertisements from new car dealers, offering car loans at 0% or possibly 1% interest rates. Well yes, that certainly sounds very good but as the saying goes “if it looks too good to be true, it probably is”.
In short, take note, read the fine print and get additional quotes to compare.
Essentially these types of offers mean your loan repayments are repaying the purchase price of the car with no interest charged on the loan. But the key is in the total amount of the principal you are repaying. Offering this type of deal is legal but is considered across the industry as a promotional or sales strategy to attract buyers.
Study the 0% Interest Car Finnace Fine Print
The key to what you are actually paying for is in studying an itemised invoice for the car itself. In offering 0% loans, dealers will usually charge a higher price for the car or include higher fees and charges such as loan establishment fees or monthly loan management fees than would be applied by other lenders.
The way to check exactly what you are paying for and the total you will be paying on the vehicle and the car loan is to get a price on the same car from another dealer who is not offering 0% interest loans.
By getting another quote and a quote on a cheap interest rate car loan from Jade Car Loans, you are then in a position to compare the total price of a Jade car loan with the 0% interest rate dealer car loan.
Is the 0% interest rate for the full term of the loan or just an introductory or promotional period?
Very often the fine print may reveal that this 0% only applies to say the first 6 months or 12 months of the car loan and after that time, the interest rate reverts to a much higher rate. A rate which will allow the lender to recoup what they would have charged in the promotional period.
What is the balloon payment?
Another way that this type of loan may disguise the true cost is to include a large ‘balloon’ or lump sum which is payable at the end of the loan term. Commercial car finance for businesses do include balloons which can be set by the borrower. If a low interest loan has a very high balloon, this may create difficulties for you to budget to repay and at the end of the loan, the balloon may exceed the value of the car.
Jade Cheap Interest Rates
Jade Car Loans does not offer 0% interest rate car loans. We comply with the ASIC guidelines around responsible lending, work with highly regarded banks and lenders and work towards achieving the cheapest interest rate car loans for our customers.
We encourage customers to always study and understand all the terms and conditions of any loans they are offered from any source and if you have any doubts, ask questions!
For a great car loan, for more information on any aspect of car finance or for a quote to compare with a 0% interest rate loan you have been offered, please contact Jade Car Loans 1300 000 003 and discuss with one of our consultants.