0% car finance - what does it mean?

  • Posted on: 7 September 2017
  • By: admin
0% car finance - what does it mean?

If there is anything that we get attracted to is ‘free. ' Anything that says ‘avail for free,' all of us try to grab it. Most of the time, we act without thinking. Hence, fulfilling the theory of consumer psychology. There is a term in car financing that is known as ‘0% car finance’. Today, we explore the meaning and repercussions of 0% finance.

What is 0% car finance?

The 0% car finance policy is considered a marketing gimmick by many. It is also known as the discounted rate. It is most popular in automobiles, real estates, and the banking world. On the surface level, the 0% finance is the best policy. It is considered free for the buyer, without an interest rate. However, everything is subjected to various terms and conditions. The mathematical formula behind the 0% car finance policy is complicated. This is because the policy differs with respect to the country and the product. Such deals are financed by banks along with product manufacturers. In such deals, the customer pays for the product in an indirect way. The indirect costs include a plethora of calculations. Such as a deposit, monthly instalments and a processing fee.Much of the times, the customer has to let go an otherwise available discount.


The 0% car finance loans are tricky, to begin with. Before you fall for them, it’s advisable to read the ‘terms & conditions’ policy. In most cases, the interest rates are varying, ensure that are constant. The instalments are monthly, missing them results in a fine. It is best to draft and agree upon a signed contract. Ensure that you know the beginning and ending dates of the agreement. It is advisable that you get legal expertise before signing the agreement. In 0% car finance policy, you don’t pay an interest.

However, it’s best to seek legal advice in such matters.