Zero-percent financing for cars: cost traps or bargains?
If you are thinking about buying a car with zero percent financing or the advantages and disadvantages of 0 percent financing compared to cash purchase or the re-import of new EU cars, then you have to put the fine print in the sales contract exactly below the Take a magnifying glass. Because what is touted by car dealers as zero percent financing for new cars often turns out to be a cost trap for buyers.
Zero percent financing when buying a car - what is it?
With car financing at zero percent interest, you buy a car immediately and pay it off in installments and without interest within a term agreed with the car dealer. The zero percent financing for the new vehicle is realized without a down payment - this makes it particularly interesting for buyers with little equity. Zero percent financing is available for both new and used cars.
Offers of 0% financing are only available from the dealer
You can only get a car with zero percent financing from the car dealer who handles the financing through the automaker's bank. For example, if you buy an Audi, the loan is with Audi's in-house bank.
Even if you conclude two sales contracts, one with the car dealer and the second with the associated car bank, you get the vehicle and financing from a single source. However, this option can be disadvantageous for you, because you are binding the terms that are offered to you by the seller. A comparison of other, possibly cheaper offers usually does not take place.
0% car finance - what are the pros and cons?
Advantages of zero percent financing:
Vehicle and loan come from a single source, the loan process is unbureaucratic
the purchase is possible without a deposit.
Disadvantages of zero percent financing:
there is no discount for cash payments the product packages, insurance packages and additional costs are confusing possible balloon rates can result in additional credit
The customer does not receive any financial advice from the dealer.
Conclusion: 0% financing is not worthwhile
When debating whether it is worth buying a car without interest or what advantages and disadvantages there are 0 percent funding compared to buying or re-importing new EU cars, the following rule of thumb applies: the cheaper the interest, the smaller the discount. The annual interest rate of zero percent refers to the car list price without the sometimes high discounts that would be granted with a cash payment. If you use the real purchase price, zero percent auto finance quickly turns into an expensive loan. Additional offers such as credit cards or insurance can cause costs to skyrocket.
An additional note:
In order to get the optimal purchase price, you should contact various car dealers in advance current special model promotions or discounts inform. Talk to car dealers actively about discounts: There are often company discounts or special offers for certain professional groups that you can benefit from.