Recently I’ve been thinking about upgrading the family car and have spent the past few weekends roaming Melbourne’s car yards, searching for the perfect deal.

The makes, models and prices may change, but no matter the yard, I keep noticing the same ‘special offer’ of 2% finance, 1% finance or even the seemingly unbeatable low rate of 0% finance.

HOW CAN YOU BEAT 0% FINANCE? AS IT TURNS OUT, QUITE EASILY.

The 0% finance offer can come with the following strings:

You have to pay the full list price of the vehicle, no discounts / negotiating allowed
You have to pay a $900 finance application fee
You have to pay a $10 per month account keeping fee for the term of the loan (Five-year loan = $600)

Given I'm in the market for a family SUV and my budget is around $40K, I’ll use it as my example. The actual price of the 0% finance ‘special offer’ would actually be $41,500, which equates to $691.66 per month for 5 years.

However, if I declined the 0% finance ‘special offer’, I could negotiate the price of the car. Let’s say, after a robust discussion, I managed to wrangle the salesperson down to $35,000. So, if I arranged my own finance at the standard 5.5% and paid $35K, I would only pay $669 per month.

So I could have an unbelievably good rate of 0% finance and pay $691.66 per month or have an average rate of 5.5% and pay $669.00 per month!

I’ll take the average rate thanks.

Hidden fees and charges are almost always added into the great low interest rate offers, so remember, it’s not about the interest rate, it’s about how much you actually repay each month. If you do need business or asset finance or a loan for a vehicle, give me a call for a second opinion – let’s make sure that the great low interest rate you’ve been offered is actually a great deal.

Happy hunting at the yard!

Michael De George