Australia's Easiest Way to Get a Car Loan
Car buyers seeking finance may canvass a large number of options in their search to find the right loan. In that search, some may come across loan offers with zero, 0% or as little as a 1% interest rate. These types of loans are not offered through Easy Car Finance but we consider requiring explanation.
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Studying the Details, Terms and Conditions
As with any finance contract, buyers should always read the fine print. If they do not fully grasp the meaning and the details are not fully and satisfactorily explained, they should seek independent advice.
With 0% interest rate finance, one details to focus on is the details in the invoice for the vehicle. The purchase price may be inflated or the invoice may include additional, and above-market fees and charges. Such fees may include a finance establishment fee or a management fee for the finance which is priced and applied on a monthly basis. Essentially loading the purchase price with what may be interest payable on another loan.
These details can be checked by requested vehicle pricing from another seller to compare.
Another option is to request a quote from us on the cheaper vehicle pricing. Calculate out the full cost of the vehicle with finance and compare with the total outlay for the 0% interest rate option.
Zero Interest Rate Car Loans: Explained
The adage about something looking too good to be true actually being too good to be true, may well explain 0% interest rate finance. Anyone considering such an offer may be well-advised to read the terms, conditions and fine print associated with the loan, seek independent financial advice and obtain a quote from us to compare the true costs involved.
These types of loans are legal, but widely considered in the lending sector as a sales or promotional tactic to attract customers. Often these offers may be advertised by motor dealers. With such a loan, the borrower is paying off the car purchase price only. No interest is being charged on the finance.
The first tip is to look closely at the finance amount – possibly the vehicle pricing, and compare with others. The vehicle price may be inflated to cover what would be the typical interest payable on finance for that amount.
Check the Timeframe for the Zero Rate Offer
As 0% rate finance is often a promotional strategy, often the zero rate is also just for a promotional or introductory time. The zero rate may apply to the initial period of the loan – 6-12 months or even less. After the expiry of that introductory timeframe, the fine print may detail that another interest rate – usually much higher than market, will come into effect for the remainder of the repayment term.
The end result being that the buyer ends up paying far more in the overall total cost of the vehicle including finance than they may have with a competitive interest rate loan from another lender.
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