0% interest rates? It’s too good to be true, right? But many people take these loans on without knowing the hidden dangers behind them. If your gut is telling you that this is a deal of a lifetime – stop and think. Here’s what 0% interest truck loans REALLY mean. You may think zero percent interest means “nothing,” but that’s rarely the case.
You’re getting the earliest late model
It sounds like a bit of a contradiction in terms, but dealers offer 0% truck loans to push older product out the door. If you buy a truck from a dealer with a zero percent loan, you won’t be able to customise the truck you intend to purchase. The trucks they’re foisting on you are ones the dealers have already bought and burning holes in their balance sheets.
You won’t be able to negotiate
Have you ever heard of a dealer that won’t negotiate? In zero percent transactions, that’s likely the case. Trucks sold with zero percent finance are often “let go” at the recommended retail price (RRP) or list price. This means you won’t be able to haggle down to a lower price, improve the value of your truck with optional extras for no additional costs or find your own finance arrangement that may save you money long term.
Fees, fees and more fees
Unless your zero percent loan is a “comparison rate” – an interest rate that includes most (not all!) fees and charges, it’s likely you’ll be forking out more in hidden charges and fees anyway. Account keeping fees, early payment fees…the list goes on. Financiers and lenders must be upfront as part of strict accreditation practices – dealers, when it comes to zero percent loans - might not.
Beware of balloon payments
There is a reason “zero percent” finance attracts some people. Dealers play up the fact monthly repayments are so low compared to other financiers. But they play down the fact there’s a balloon (also known as residual value) payment that’ll hit at the end of the loan. This may be up to 30% of the truck’s total value that you must come up with as a lump sum. If you can’t pay or refinance the balloon payment, then your truck is liable for repossession.
Always do your homework
Zero percent loans are more trouble than they’re worth. Finding a good deal on truck finance and buying at a lower negotiated price saves more money. Use a good loan calculator to see the difference, or talk to a financial professional.