The knot has been cut by Musclecarfacts. You have caught your eye for a new car and are planning to purchase it. Congrats! The only question that remains is: how are you going to finance that car?
Some car dealers are on hand to convince you with a tempting offer: an installment car at 0% interest. Too good to be true? Better to take a closer look at the conditions …
How to finance the payment of your car?
If you cannot pay the full amount for your new car yourself or if you want to save a little longer, a car loan offers a good solution. Certainly in the current climate, where interest rates are so low.
Everyone naturally wants an affordable car loan. That is normal. However, you should pay attention if a garage owner offers you a payment at 0% interest . There may be pitfalls that ultimately make you pay more than with a traditional car loan .
Car loan at 0% interest
When seeing a car loan with an interest rate of 0%, always ask a few critical questions:
- How much is the advance? This can often be as high as 30% of the purchase price.
- Do you get extra discounts? The chance is very high that you will receive little or no discount. If you can negotiate a substantial discount with a car dealer without a loan, it is often greater than the interest costs that you save at 0% interest.
- Is there an increased final payment? Usually this type of loan has a shorter duration, so you have to pay a hefty sum of money with the last monthly installment. Such a loan is sometimes called balloon credit. Instead of paying the last sum (the “balloon”), the car dealer can possibly take over the car. But note: if the condition of the car is not good, he may refuse.
- Is there an extended guarantee? Sometimes as a customer you are required to take an extended guarantee of 500 to 800 euros. However, this is often not mentioned in the advertisement.
- Exactly how much do you pay per month? Don’t forget to include possible costs such as administration costs and additional compulsory insurance in the calculation.
- Who owns the car? Sometimes you only become the owner of the car after the full payment. This means that you cannot just sell your car without the permission of the car dealer.
- Do you get enough money for your old car? You may also want to include your old car in the deal when you take out your loan. In that case, pay attention that the garage owner does not undervalue your old car. With that handy trick, the car dealer can take advantage of a payment at 0% interest.
Conclusion: always investigate whether the car dealer is not trying to recover the lost interest in another way.
Compare car loan
It is therefore best not to compare car loans by simply comparing interest rates.
With a classic car loan you avoid surprises in any case. You know perfectly in advance how much you will pay each month. The fixed interest rate does not change during the entire term of your car loan. You can therefore ask yourself: is it worth giving up that certainty for a fairly limited possible benefit?