Interest Free and Low Rate Finance Options, Are They Too Good to be True.

October 11, 2019

Interest Free, Low interest Rate Finance Options That Seem Too Good to be True.

                              Vehicle manufacturers and retailers offer interest free and low rate financing to increase sales.

Steve Sell 11/10/2019

Often interest free and low rates are only available for car buyers that meet strict criteria and have strong, proven credit histories.

This is not to say that an interest free financing offer won’t work for you. Just make sure you do all your sums first.

I will explain some of the issues with interest free and low interest loans.

Interest free finance and low rate offers sound awesome, but these offers may not be as good as they sound.

  1. Interest free, low rate finance offers are designed to get people into showrooms.
  2. The offer usually applies to a certain range of models. Often run out models. Not every car is eligible.
  3. Finance terms are often for a limited number of years.
  4. A deposit maybe required.
  5. A residual payment may be part of the offer and you must meet their credit criteria.
  6. The dealer and/or the manufacturer will not discount the price and will request the full retail price.
  7. There is no ability to negotiate the price.
  8. Dealers will often negotiate harder to pay you less for your trade.
  9. You may not be able to upgrade to a better model. You may not be able to upgrade the features on your new car and still retain that special finance deal.
  10. Finance terms can be inflexible. You may need a large deposit, or the length of the loan may not meet your requirements. The term may be for a shorter time than you require. They are often less than 5 years.
  11. Check for fees. Establishment fee. This fee is charged by the financier to set up your car loan. Origination Fee. This is a fee charged by the dealer. Monthly payment fees. These are ongoing fees you are charged on a monthly basis and vary from lender to lender. Early repayment or termination fee. If you repay your loan before the full term is up, you may be charged a penalty by the financier.
  12. Read the fine print in the conditions.
  13. Not all the interest free and low interest low rate deals are bad or won’t work for you. Do your homework and check them first.
  14. Make sure that you always make your payments on time to avoid damaging your credit rating and incurring additional fees.

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