Zero rate auto financing: zero and costs

Do you want to take advantage of the offer of a zero-interest car loan, but do not know all the details of the offer?

Do you want to be sure of saving with this type of loan?

Do you want to be sure of saving with this type of loan?

In this study we will explain the characteristics of this form of consumer credit, clarifying whether it is really a loan that does not require the payment of interest.

The zero-rate car loan is, in fact, a loan for the purchase of a vehicle (but also a motor vehicle, a camper or, sometimes, a boat) that does not provide for the payment of an interest rate , as happens instead for any other form of credit. Apparently, therefore, this is a really advantageous opportunity, considering that interest is an additional cost that can also become very expensive. To understand if the loan is really free of additional costs, in addition to the repayment of the capital through the payment of the installments, it is necessary to consider the different expressions of the interest rate.

When we speak of “zero interest rate”, also with reference to auto loans

zero interest rate

We refers to the TAN, nominal annual rate : this, expressed as a percentage of the capital, calculates on an annual basis the interest to be paid to the bank. In the case of zero-interest car loans, the TAN is obviously void: no interest is paid. However, the latter are not the only costs of a loan: there are a number of ancillary costs that are needed to open and manage the loan. These expenses are counted in the APR, annual percentage rate : it is very likely, in fact, that zero-rate bids, however, include an APR to be paid. Among the expenses there are those of preliminary investigation for the beginning of the practice and those of collection of the single installments.

In the case of car financing, the consumer credit that concerns them is provided mainly by banks and financial companies affiliated with distributors (dealers) or production companies, if not the financial sector of the main car manufacturers. If you pay attention to any car advertisements, you will notice that the information provided (often very quickly) at the end of the advertising message also concerns TANs and APRs, which are always different. In the case of a zero-interest car loan, the APR will still be above zero .