It is becoming more common to see car dealerships advertising 0% p.a. finance offers on brand new cars. While these may sound like a dream come true you might find that once you get into the dealership and start making enquiries that the offer comes with multiple conditions. These may include large upfront deposits, strict lending criteria, vehicle restrictions and limited opportunities to negotiate the price of the car.
Customers may visit a dealership with the impression that they are able to get 0% p.a. finance on all cars only to find out that the vehicle they have been researching is not included in the offer. Dealerships often limit the offers to less popular models or cars that have been sitting in stock for a while such as previous year or demonstrator models.
If you are looking to trade in your current car you may want to ask for a valuation with and without dealership finance. Reviewing your options independently could help you to accurately compare which finance option suits you best.
Customers may visit a dealership with the impression that they are able to get 0% p.a. finance on all cars only to find out that the vehicle they have been researching is not included in the offer.
To be eligible for the 0% p.a. finance offer you may need to meet strict lending criteria such as a large upfront deposit or have a perfect credit history. Other conditions may include needing to be a home buyer or having been in your job for a certain length of time. If you are a renter with short term employment or an imperfect credit history you may be ineligible for the 0% p.a. finance offer.
To reduce the weekly repayment that is quoted to you a balloon payment may be included in the finance offer. A balloon payment is a large repayment that needs to be made at the end of the loan term. The amount of the balloon is typically a third of the financed amount but can vary based on the loan term and the financier. You should think about how you plan to repay this balloon payment when considering your finance options. Most customers either refinance their balloon amount or sell their car to cover this cost. If you choose to sell the car to payout the balloon payment, you might find that there is a shortfall which you will need to pay.
So before you speak to your dealership about finance, speak with one of our Australian based consultants to discuss your options.