Understanding 0% Interest Finance & Affordable Alternatives

An advantage of 0% interest offers which may be perceived by some buyers, is of course not having to pay any interest on their car loan. But this perceived advantage may come with less obvious disadvantages. Buyers should read the fine print and we advise getting quotes from other lenders such as Jade, to compare.

The disadvantages are the issues to be aware of with zero interest car loans. The inflated price of the car is an important one. With new cars, price comparisons across dealerships can usually be quite a simple process. See if you can buy the same make and model at a better price from another dealer. With second-hand vehicles, making vehicle comparisons can be more complex as used cars can vary in mileage, condition and other features. But it may be worth researching the market.

While comparing the cost of your new vehicle, also compare the trade-in offered on your current car. To compensate for the zero interest loan on the new vehicle, you may be offered a much lower trade-in price than you could achieve with a standard loan arrangement. The loss may be significant and will add to the overall cost of the loan and the new car.

Another key downside can be higher lender fees and charges. These may be in loan establishment fees or ongoing monthly loan management fees. These can add up significantly over the full term of the loan. Buyers can use our Finance Calculator to work out the total cost of their loan and their car for both 0% interest loans and our low rate options.

A very important point to look for in the fine print is how long the no interest period lasts and what happens when it ends. Check the interest rate that applies at the end of the initial promotional period, work out the repayments and compare that with our best rate car loans.

Some buyers may think they can take on an interest-free loan for those initial months and then refinance when the promotional period ends. Good idea but is it possible? Read the fine print for the conditions and the exit fees. These are lender charges when a loan is finalised before the scheduled end of the term.

Zero interest car loans are offered through an arrangement between a dealer or manufacturer and a finance company. Buyers do not get their choice of lender and the lender offered may not be the best fit with the buyer’s credit and financial profile. Jade offers buyers the choice of 80+ lenders and we match each customer with the right lender. This can be extremely significant in being offered the best rates, best loan terms and overall, most suitable loan.

Compare any offers with our alternatives to zero percent finance – the best rates, individually sourced and negotiated loans from across a vast lender network, fixed rates, terms and repayments and experienced, expert brokers working in your best interests. Request a quote from us to compare and make a well-informed decision on your car finance.

1. No choice of lender.
2. Possible higher priced vehicle.
3. Compare higher fees and charges
4. Lower trade-in.

Compare with Jade Finance. We are brokers working in your best interests.