An interest-free car loan, too good to be true?


During the Motor Show, many private lenders lower the interest on car loans. Although you can take out an interest-free loan with some sellers. But is that wise? Further editorial at

The private Motor Show is the event to buy a car. Car salesmen then come up with all kinds of salon conditions and the private lenders cut interest rates.

Hard fight

car finance

And this year the battle is for the cheapest car financing. For example, private lenders have once again lowered the interest on car loans to a new low: 0.65 percent. The private lenders do that in the footsteps of, among others, private lenders. They had already lowered interest rates to 0.85 percent. That is 4 basis points lower than the record last year. That was then in the name of private lenders.

It remains to be seen whether the private lenders will dive under the rate of the large lenders. Lenders are expected to announce an interest rate cut at the Motor Show.

Zero rate car loans car salesman

Zero rate car loans car salesman

But not only the private lenders flows with cheap loans. The car manufacturers also sell loans. And those loans look very attractive with an interest rate of 0 (!) Percent. Even though a few snakes are hidden under the grass.

So you only enjoy a zero rate if you meet a number of strict conditions. For example, private lenders come up with such salon conditions. You can take out an interest-free car loan with the car manufacturer. Although the car giant requires an advance.

Large advances

For example, if you buy a car with a value of 16,806 dollars, you must pay private lenders an advance of 8,654 dollars. That is more than half the purchase value of your car. In addition, the car manufacturer requests that you repay that loan within 36 months. That translates into a monthly repayment of 226.44 dollars.

No advance at private lenders

Whoever borrows the same amount from one of the private lenders that offers an interest rate of 0.85 percent, pays 286.17 dollars a month if he repays that loan within 60 months. That is slightly more than at the car manufacturer. Although you do not have to pay an advance when you take out the loan.

In addition, you are free to determine the period within which you wish to pay off your loan. With some private lenders, you can extend that period yourself to 84 months so that the monthly repayment falls considerably to 206.12 dollars.

In addition, you may miss some other benefits if you take out a loan with your car manufacturer. For example, you may receive less discount on your car or enjoy fewer (free) options if you opt for an interest-free loan.

Balloon credit

cheap loan

Car manufacturers also like to respond to those monthly repayments. With a so-called balloon credit, they give interested parties the impression that their loan is very cheap because the monthly repayment is very low. But that is because at the end of the ride you still have to pay a considerably large amount.

You can sometimes decide to keep the car at the end or not. Moreover, there is a substantial price tag attached to such a loan. In other words, there is no longer a zero rate. So: think before starting.