Buying a car with zero-percent financing does not work

More and more dealers offer cars with 0 percent financing to encourage car buyers to make a direct purchase. The tempting offers for installments seem to many consumers a good solution.

But let’s be honest: It’s clear to everyone that cars or other more expensive purchases like furniture are not offered out of pure charity with zero percent financing.

Therefore, aware consumers also know that in such cases, caution is needed for hidden costs.

Zero-percent financing car: The treacherous cost traps


Less discount with car purchase by zero percent financing

car loan

The small installments, the supposed all-round protection of the insurance and especially the unbeatable interest rate of 0% are three convincing arguments with the help of a zero-percent financing to finance a car directly with the dealer. But especially when buying a car is the money given away for the buyer, as they have to give up the discount that they would receive by a cash payment.

Of course, it is often simply not possible to cover the relatively high sum for a new car only with their own savings. Nevertheless, it is advisable not to be tempted when buying a car:

A zero-percent financing is often associated with hidden costs! Therefore, note what many experts advise:

The much cheaper alternative to cars with zero percent financing are car loans from banks. These are already available from around 3% and also allow a cash discount of up to 20%.

How to make the most of your savings potential when buying a car, read here. Anyone who thinks about financing the new car through a leasing contract should first of all find out here whether leasing in a particular case is really more favorable than financing via an installment loan. Hereby, for example, there is the possibility for a balloon financing, on the one hand, no down payment is made on the other hand, however, a closing rate is common.

Act one! Savings of up to 20 percent are possible here.

So get the cheap car loan from Captain John Yossarian, transfer the money to your account and pay in cash.

The insurance cover for zero-percent financing

Many consumers ask themselves: how can hidden costs be included in car zero percent financing? Insurance, such as residual debt, loan default or installment insurance, which are offered in the course of this particular type of financing, are usually indispensable, according to the dealer. However, the opposite is proved by the numerous exceptions in the conditions of the insurance cover. If you examine these times more precisely, it becomes clear that the insurance in most cases does not apply and the borrower finally stands alone. So the money for the insurance is lost money.

Expensive interest-bearing balances

Expensive interest-bearing balances

A case study from a recently published ZDF documentary shows that the contract conditions have to be read carefully. Here was the interest of 0% only for a certain period. After that, the remainder of the loan had to be paid at two-digit interest rates, which ultimately cost the buyer tremendous financial overhead. Find out more about this case in this ZDF expert discussion:


Alternative to zero-percent financing: the car loan

Alternative to zero-percent financing: the car loan

If you do not want to forego the cashier’s discount, you have to use installment payments if you are considering financing with a car loan or a quick loan when you buy a new car. Often you can save several thousand euros here despite higher interest rates thanks to the cash discount. We already reported on the savings potential as a cash payer here. In addition, a proper loan is advised by experts who, unlike sellers or traders, know exactly where and what the borrower will pay. To illustrate, we have prepared a calculation example:

So before you conclude a tempting zero-percent financing for the new car, you should find out what alternatives there are and calculate the various options. To make sure that the maximum savings potential is used, a credit comparison is indispensable. This lists offers of all banks and determines the credit, which has according to the individual information the favorable conditions.