Car Loan Through Dealer Anything but Free
As of 1 September car dealers are no longer allowed to grant 0% loans. Now that they have to be transparent about the costs, they turn out to be a lot more expensive.
0% loan no longer offered
Financing your car at an interest rate of 0%. That is of course too good to be true. This also appears to be the case in practice. There are financial obligations attached to a so-called 0% loan. The Association of Finance Companies has therefore agreed, in consultation with the Netherlands Authority for the Financial Markets, to no longer offer these loans.
Transparent about loan interest
From 1 September car dealers must be transparent about the interest that they charge for a car loan. A tour of the official dealer sites of a number of well-known car brands shows that they are indeed displaying a loan interest rate. This also shows that financing a car through the dealer is relatively expensive.
Car loan costs of 15,000 euros
We examined the financing for a car of € 15,000:
- Volkswagen Private plan: We find an example of a 36-month loan for 6.99%.
- Renault Flex choice: The more products you purchase (warranty/maintenance), the lower the interest. The loan interest without services is 7.9%.
- Toyota payment plan: Here you work with a calculator. We came to 15,000 euros at an interest rate of 7.9%.
- Volvo hire purchase: Requires an interest rate of 7.99% for a 72-month loan.
- Kia Finance: Comes with an interest rate of 7.99% with a 36-month loan.
- Opel Financing: Provides limited information. It is not clear at which loan amount this interest applies.
Comparison with a personal loan
The most suitable loan form for a car is a personal loan. You will receive the money in one go on your account. After that, you pay an agreed monthly installment and interest until the loan has been paid off. Unlike hire-purchase financing, you immediately become the owner of the car.
The costs for a personal loan through a regular financing company are considerably lower:
- The lowest interest rate for a personal loan is currently 4.2%.
- If you want to borrow 15,000 euros, this is possible from 4.4%.
- A loan for 5,000 euros is again slightly more expensive, from 6%
Borrowing Money Comparing Pays Off
It is certainly worth comparing borrowing money before you sign up for financing at the car dealership. It is also advisable to check carefully whether there are extra costs associated with the loan. Car dealers can combine the loan with related maintenance and warranty contracts to reduce the borrowing rate