Beware of 0% comparison rates

Posted on Posted in Car loan, Finance, Interest rates

No one truly believes that lenders are giving away money for free and without interest. But a zero-percent comparison rate sounds attractive and is a great marketing tool. Don’t be fooled. The cost is there. You just can’t see it yet.


How does it work?

The interest you would have paid often goes into the price of the vehicle. This is why when you buy on 0% interest, there is little to no wriggle room on the price of the car. Whereas, if you finance the purchase through a lender, you can negotiate down the price tag.


Am I eligible?

Zero-percent finance offers are geared towards people with near-perfect credit ratings, which is why the offers are usually qualified with a statement to the effect of ‘subject to credit worthiness’. It is usually a good idea to get pre-approved for a loan before you begin shopping so you have a fallback position in case you don’t qualify.


Should I just pay cash?

There are certainly benefits to taking out a loan, versus paying cash for your vehicle. There are circumstances where taking out a loan and making regular repayments can have a positive impact on your credit rating. Paying cash for a car doesn’t show up at all. Financing your purchase will also leave your cash free for other investments and emergency situations.



Ultimately, if an offer sounds too good to be true it usually is. Take a good look at the fine print and compare prices of vehicles before committing to a sale. If still in doubt, get in contact so we can assist.