Auto loan at 0%? Vigilance is required in Belgium. Good Tips to Know – Practical Guide to Car Loan
It’s impossible not to notice this enticing announcement made by car dealers. And the 2019 Auto Show is on the horizon. nationalservicedealersassn.org for more.
And quickly thought: in absolute terms, difficult to finance cheaper your new car, since you pay no interest on your car loan.
And yet, the 0% auto loan is not necessarily the most advantageous formula.
If you opt for a 0% car loan, your dealer will want to make up for the shortfall in what he or she lends you without interest. And he has several ways to do it:
- Require a larger down payment (Exit more cash)
- Reduce the discount (s) when you buy your new vehicle (Pay more for your car)
- Provide a shorter repayment term, with a last higher monthly payment at the end of the contract (up to 50% of the price). Your dealer may agree to take back your vehicle if it is in very good condition. This is probably what we call a “balloon credit”. The monthly payment remains low because of the balloon to be paid at the end of the contract. (Refund in poorer conditions)
- Provide a shorter repayment period with a much higher monthly payment. (Refund more each month)
- You are required to subscribe to larger guarantees that cost between 500 and 800 $ in total. You see it during the discussion of the contract. (Accept conditions and therefore bear additional costs)
- Beware of undervaluation when picking up your old vehicle. (Receive less in return for the abandonment of your old car)
Read the conditions well and negotiate with good knowledge that you are.
Purchase at $ 15,000 over 5 years at 1.90%
|Specificities||Classic loan||0% loan|
|Total interest paid||$ 728.40||0 $|
|Advance payment||0 $ or common agreement||0% up to 30% of the price|
|Discounts on new vehicle (3 to 19%)||450 $ – 2.850 $||Higher price|
|Duration of credit||5 years||<5 years|
|Take back your old vehicle||1000 $ min||Beware of undervaluation|
|Obligation to subscribe to a broader guarantee||no||Between 500 and 800 $ additional costs|
|Who is the owner?||Me||Me or my banker?|
As you can see, it is quick to take the interest you would have to pay for a conventional car loan. Given the gifts made by the dealers in the purchase of your new car, the interest payable is really relative.
We have drawn your attention to a series of things to check when you are negotiating your new acquisition.
Above all, do not sign the purchase contract without having negotiated – before or at the same time – your auto financing.
To find the most advantageous auto loan for you, nothing better than comparing the conditions offered to you by the various bankers. Quick, easy and at your own pace, take advantage of our comparative tables to find the best rates for your car loan.
Do not forget the reduced rates if your vehicle is “green”.