The Whole Truth about Zero Percent Car Loans

More commonly, manufacturers and car dealers are advertising incredible, ‘too good to be true’ deals on new vehicles with interest rates between 0% - 2% - but are these deals really as good as they’re made out to be?

Subvented finance is the technical term used to describe low or no interest finance. But what is subvented finance?

What is subvented finance?

Subvented finance is a system whereby the manufacturer or dealer offers low or no interest on vehicles and pays the amount of interest that would have been payable by you, the customer back to the financier. So that doesn’t sound so bad, right? Actually when you put it that way, it sounds even better.

But why would a manufacturer or car dealership does this? The truth is simply that the find ways to pass this cost back to you, the customer. Generally this is achieved through the vehicle profit margin.

What does this mean for me buying a vehicle using subvented finance?

It means a few things, firstly that you are paying the same amount either way, if not more. The manufacturer or car dealer will not be likely to reduce the vehicle price to secure your business because they have to keep the profit margins on the vehicle higher to pay the interest back to the financier.

Secondly, obtaining finance through the dealership can further hinder your ability to negotiate a better deal on the vehicle price because they control the deal through your finance approval. You are now obligated to buy through them, therefore they don’t have to negotiate on price.

Finally, you may not receive as much money for your trade in when purchasing a vehicle using subvented finance as dealerships may use your trade in vehicle as a way to retain profit margins.

How do I make sure I get a good deal both on finance and vehicle price?

The best way to ensure that you get a good deal on both your vehicle finance as well as a reasonable vehicle price is to ensure that no one other than yourself can control of your vehicle purchase. This is best achieved by using a third party finance broker to find you the best option for vehicle finance.

An Approved Car Loans Finance Broker is totally independent (they don’t work for the dealership, they work directly for you), has access to over 30 leading lenders and best of all - you are under no obligation to take out finance unless you’re totally happy with the options they present to you.

This method ensures you get the best possible finance package for your individual circumstances, since we compare financiers on your behalf to save you both time & money. But when you visit the dealership, you also have more negotiating power over the vehicle price because you aren’t relying on them to arrange finance on your behalf.

What if the dealership won’t negotiate on the vehicle price?

If the dealership isn’t willing to negotiate to get your business, our Business Development Managers can use our complimentary Vehicle Select Service to find the dealership who is willing to offer you the best price on your vehicle of choice by making them bid for your business. Either way – the outcome is that you get the perfect vehicle for you at the best possible price.

Get your Best Rate Car Finance Today

Speak to an Approved Car Loans Finance Broker today, because on top of offering bank beating rates, easy online applications and same day approvals – we’re here to make your car finance easy!

Apply Online in 60 Seconds

Or phone us on 3340 6700 to speak to one of our friendly finance staff



Tags: Subvented Finance, Approved Car Loans, Zero Percent Car Loans, Best Rate Car Finance

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