August 26, 2013
Ooh Ah!! Noticed a lot of catchy advertising around 0% car finance lately?
You may be thinking “How can the dealer possibly offer a 0% loan to purchase a car”.
The truth is that there is no such thing as a free lunch. Check closely the conditions; often this 0% finance is conditional on a fixed purchase price which is much higher than you could negotiate if you had your own finance.
The Technical term for this type of low interest rate is known as a "subvention agreement". Under a subvention agreement, you may not be paying interest on the loan, however the car price is loaded so you actually end up paying more upfront than if you were buying the car without dealer finance.
The other thing to look for is what are your options at the end of the 0% term? You could continue finance using the car dealer but at a much higher rate. Or you could refinance with another lender, but because you have paid a higher purchase price a the beginning your loan may be worth more than the car.
So before you put pen to paper in the dealership, give us a call to review your car dealer finance ; as your local Mortgage Choice broker, I have access to a range of lenders and can help you find a car loan that’s right for you.
Contact Steve or Fi at Mortgage Choice in Noarlunga on 0421 360 205.
Or visit www.mortgagechoice.com.au/steve.pratt for more information.