Thursday, July 19th, 2018

Why a zero percent interest rate could cost you more for a new car?


Car financeBuying a car is a dream for every person. Cars are sold in various deals by manufacturers. Different interest percent rates are tagged to the different models of cars. Cars that are sold with a zero percent rates actually cost much more than the cars purchased at a discounted price. Discounted price for the top rated car with a regular finance rate will cost you less and in this way you can save your money also.

Consider this for a start. Though the drive away price of Nissan Pulsar was $24, 990 last month, still it was available at zero percent finance rate. But the same model was sold previously at the drive away price of $19,900. If you consider 8 percent regular interest rate, still you find the total repayment will cost you less than the deal of zero percent interest rate.

According to the survey of, a car sold for $19,900 as drive away price, the total repayment over three years at 8 percent interest costs $624 per month to complete the full loan that total costs $22,449. This price did not include any extra fees or establishment charges. But the same model with $24,990 as the drive away price at zero percent interest rate worked out to an amount of extra $2541 for three years, with $694 per month. These figures are calculated with the help of online calculator.

How to drive a bargain?

  • Make sure to ask the total repayment amount of the loan for certain period of time, regardless of the rate of interest.
  • Ask if the car comes at the low finance rate or you can negotiate about the price of the car with the dealer.
  • Make sure to compare the two interest rates, one which is offered by the manufacturer and the other which is available in the outside market. In some cases, dealers can prove to offer better interest finance rate than the outside lenders and banks.
  • Most of the cars with low interest rates are only available for the term of three years. But after calculating, you can realize that the total monthly repayments are costing you much higher than the cars with regular interest rate for the term of more than three years.

According to the finance experts, car buyers should figure out the total repayment amount on low interest rate before finalizing the decision. Car buyers must also compare the total repayment figure on zero interest rate with that of a price of discounted car on regular finance offer before buying any car. Low finance offers are mostly used by the car companies with a sole purpose of attracting customers into showrooms. But in most cases, these deals are offered with the included cost of full dealer delivery charges and full price of the car. This is a business strategy of the car companies to sell their cars as much as possible.

So, do not get trapped into the web of attractive car deals. Do always compare the prices with zero interest rate and regular interest rate before dealing any car finally. Be clever enough to save your money by not getting attracted to the false offers.

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