0% Car Finance

0% Car Finance!

0% car finance is basically a loan to buy a new or used car with no interest charges at all, ie. at 0% APR.

Why is it available on some deals?
It is a means of encouraging sales and is achieved either by the car manufacturer themselves subsidising the normal cost of providing the finance - ie they cover the normal interest charges - or the price of the car itself has been increased to cover these charges.

Is it a good deal for me?Audi 0%
Well, it might be. All depends on your own circumstances and the actually reality of the deal being offered.

How can I tell if it's a good deal or not?
What you must always do is try to find out the alternative deals on offer - either cash or finance.

For Example:
Let's imagine there are three deals you can find on a certain new car.
Deal One:
Cash Price = 10000
Deal Two:
Price = 11000, Finance = 500 deposit and 36 months at 352.92
Deal Three:
Price = 12000, Finance = 500 deposit and 36 x 319.45 on 0% APR

So, which deal is best?
Well, obviously if you can afford to pay cash then Deal One is best!
If you need finance then Deal One can still be considered but we'll look at the other two deals first:
Deal Two = 36 x 352.92 = 12705.12 plus your 500 deposit = 13205.12. This is the total amount you'll end up paying for the car if you complete the loan.
Deal Three = 36 x 319.45 = 11500 plus your 500 deposit = 12000.

So, straight away we can see that for anyone buying on finance, the 0% Deal Three is better than Deal Two despite the Deal Three price being 1000 more expensive. In fact you'd save over 1200 by taking out the higher price 0% deal.

But let's also go back to look at the lowest price cash deal.
You could also look into sourcing your finance from another source other than the car supplier.
Let's imagine your own bank has recently offered you a special low rate finance deal.
Now assuming you can actually get that low rate APR - very important to check this carefully as often lenders will advertise a low rate being 'subject to status', which often means that in reality most customers will get a higher rate...
So assuming you get the low APR rate, then it might be something like that for the 10000 loan you need you'd repay it as a 500 deposit and 36 x 287.64, which would be a total repaid of 10855.04.

So, you can see in the above example, the 0% deal did not in fact work out best!
However this situation will be different each time and that's why you need to sit down and work out which is best for you! If you're not that good at maths then ask someone who is - all you want to know is the total amount repaid for each particular deal so that you can make an informed choice.
Good Luck!