Sometimes when you’re shopping around for a caravan, motorhome or camping trailer, you’ll find dealerships offering low interest or 0% finance interest rates. Now, on face value these look like a great deal, but remember to consider all the facts.
When you do a little research you may find you’ll end up paying far more than if you had shopped around for a better loan or went through an independent broker like Aussie Leisure Loans.
What’s Wrong With 0% Vehicle Loans
You have to remember, if dealers aren’t charging interest on their finance deals, they’ll be making money in other ways. There are actually quite a few ways they can do this;
If you walk into a dealership and ask for a 0% finance deal, you probably won’t be able to negotiate on the price, meaning you’re now paying full retail. In most cases you can almost definitely negotiate a better price if you’re not tying yourself in to the 0% finance option.
- Trade In Value
If you’re locking yourself in to their finance deal you’ll also find the trade in value for your old vehicle is much lower than if you were on a better standing to negotiate.
- Loan Flexibility
There often aren’t many options when taking out 0% finance. The loan terms aren’t as flexible so things like balloon payments will be out and there may be a number of hidden fees not advertised on those big “Zero Percent” signs.
The Deal With “Guaranteed Price On Future Trade In”?
Some dealerships also offer “guaranteed price at future trade-in” on your new caravan or motorhome. This is pretty clever because they’ve effectively locked you in to buying your next vehicle from them.
This usually takes the form of an upfront loading to the cost of the car. These deals tend to come with restrictions that are likely to prevent you from taking up the offer when you come back to upgrade anyway.
Do Your Homework & Save
Do a bit of research before locking yourself in to a zero percent finance loan at the dealership. If you have a good idea of the value of what you’re buying, and what you’re trading in, you’ll be able to avoid paying hefty mark ups. A bit of time spent research prices online can go a long way.
You can also use our caravan finance calculator to get an idea of your repayments and the current comparison rate to better inform yourself about what a typical finance arrangement might cost you.
Also do a bit of shopping around for leisure loan quotes from a finance broker before heading in to the showroom. You can even arrange pre-approved loans so you have the confidence of knowing what you can afford, enabling you to negotiate a better price with the promise of payment on the day.
At least if you do decide to take the 0% car finance option, you’ll have done so knowing all the facts.
Feature image by Tim Regan on Flickr.