There are a number of ways to finance a car. In recent years we’ve frequently seen zero or low percent car finance advertised. Many people find this an enticing way to purchase their next new motor vehicle. But have you heard the old saying ‘you don’t get anything for FREE’? Well the reality is – you don’t!

So who is really paying for you to have an interest free car loan? You guessed it… YOU ARE!


Firstly, there is no doubt the interest rate being advertised to finance the vehicle purchase is legitimate. How are they able to offer this rate? These finance offers are typically part of what the industry calls a ‘subvention’ finance program as the interest rate for the finance package is being subsidised by the dealer or manufacturer out of the profit made on the sale of the car. A dealer will need to make a larger margin on the car to be able to pay the subvented amount to the lender and still maintain their normal margin.

Remember also: The higher the purchase price of the car, the more you will pay for items such as GST, stamp duty and luxury car tax (if applicable).

We often find once a discounted cash Purchase Price has been negotiated, those clients who then arrange finance through us at ‘normal’ market rates typically end up paying lower monthly repayments (thus lower total repayments) over the term of the finance contract than they would through obtaining subvention finance.