What is it?
0% car finance is interest free loans. This means that you don’t pay any interest on your monthly payments, so the payments go diretly to paying off a car, you usually end up paying as much as an actual car buyer would, just not all at once. 0% car finance can be tricky to find, this is because many of them are only offered for a limited amount of time.
How does it work?
0% car finance works by spreading your payment out over an extended period of time to make buying a new car more affordable, you just don’t pay interest on it. Manufacturers and dealers will still earn the same amount of money as they would selling the car, just over a longer period of time.
Is 0% car finance a good deal?
Some people think there’s a catch to 0% finance because you’re borrowing money without having to pay a fee. However, it’s not a scam, the deals are just rare and hard to secure. Whether this deal is good or bad all depends on your current circumstances and budget. If you can already afford a car outright you might benefit more from bonus cash intensives or freebies, this is because price negotiations can be a bit more difficult as interest has already been deducted. Although, if you’re looking at buying a car on finance and can afford the monthly payments then it can be a very handsome and affordable option. Make sure that you take the time to read and understand the terms and conditions and seek professional advice if you’re unsure on anything.
Who qualifies for 0% car finance?
In order to qualify for 0% car finance you’ll need a strong credit profile, this is because it’s a high risk offer, so finance companies will only approve you if they’re confident that you’ll be able to pay every month. You need to make sure that you completely understand everything in the contract before you sign anything.
What are the downsides to 0% finance?
0% finance deals are usually shorter than other deals, so there’ll be higher monthly repayments in order to pay off the car more quickly. Longer contracts aren’t necessarily better, as you could end up making monthly repayments on the same car for up to 6 years. You will need to scrutinise your budget and make sure that you find a comfortable medium on your spending. One thing to be aware of is that you’ll need a larger deposit. You need to look out for contractual clauses, this could mean that 0% interest may only be available for a portion of the loan term.