The (costly) truth about 0% p.a. interest rate car loans

Picture this. You’re in the showroom, you’ve found the vehicle you love – and even better, the dealer is offering finance at an unbelievable 0% p.a. Amazing value, right? Actually, no – not such great value at all.

Zero percent dealer finance comes with a twist. It’s known in the industry as ‘subvention’ finance. This means the cost of funding is built into the car’s advertised price. So the dealer can often not afford to provide a discount because they’ll lose money.

For you, as a car buyer, 0% p.a. finance offers very little room to negotiate on price, yet this is one area where motorists can save big dollars on the cost of their car.

Sure, dealer finance can seem tempting especially in the high pressure environment of a car yard.

But don’t race in.

Weigh up your finance options before you hit the showrooms. This gives you time to check out the range of car loans available, and by organising loan pre-approval you are in pole position to drive a bargain at the car yard.

If you’re in the market for a new vehicle, talk to us about competitive car finance, and shift the savings on your next car into top gear. We have access to a range of vehicle finance providers and car buying services and will help you compare all your options.

In the meantime, take a look at our short Money Chat video for a quick rundown of car finance options.

Top 3 things to look out for


0% p.a. interest car finance offers usually apply only to certain models in a range, so if you have your heart set on a certain model, you may have to compromise to take up the 0% p.a. offer.


Look out for additional clauses in the sales contract, like servicing the car regularly at the dealership to maintain warranty.


Make sure you read the fine print of your sales contract and only pay for the warranty and insurances you really need.