Shopping for a new ride? Discover these amazing car loan promotions you didn’t even know were out there and find out if they’re suitable for you. We’ve compiled the most interesting offers available and assessed if these deals are truly worthy. Read on for more on car loan promos:
1) 0% Down Payment
What is it?
A car loan that offer buyers the opportunity to apply for loans without any money down, usually appealing to the newly-employed or those still in college. The loan is mostly applicable for new car purchase.
It’s a great source of help if you need to secure a car loan but simply do not have the funds to make a down payment. Moreover, for zero down payment loans under a ‘graduate scheme’, even those with lower monthly salaries can get approved with a guarantor.
You can expect to pay more in interests for two reasons: You are not putting any money down, so your loan amount will be larger thereby inflating total interest payable over the tenure of your loan. Per annum interests are usually higher, about 0.5% more on average than that of loans with down payment.
2) Dealer Loans
What is it?
A loan obtained directly from the dealer (or dealer’s bank panel) to help buyers make the purchase. Financing for such loans may originate from dealer-bank partnerships or even from a credit-providing company linked to (or under) the dealer. *The term ‘dealer’ used here refers to the company managing / distributing the brand such as Sime Darby for Ford.
Dealers have incentive to sell their cars, so they will want to help you get the loan, but within reason of course. Your loan may still get rejected depending on your credit status, employment, etc. Additionally, these interest rates may be better than bank rates, but do use our car loan calculator to help with comparisons.
If you are not a graduate or fall within the requirements needed for a graduate loan, you may still be eligible for zero down payment (even zero interest) financing from these dealer-direct offers.
The loan can be somewhat restrictive as in there may not be trade-ins allowed. Your option in this case would be to sell your car separately and then make use of the proceeds for your current vehicle purchase.
3) Tiered / Staggered Instalments
What is it?
A method to help you pay smaller instalment amounts in the beginning, with larger payments to follow later in your loan’s tenure. The tiers or staggering relates to total loan repayments inclusive of interest being rearranged to accommodate general affordability, not individual.
It’s a great promo for those looking to finance the purchase of more expensive cars, yet are not financially able at present to fulfil a larger monthly instalment. The early repayments are meant to be low with interest rates being more or less equivalent to the competitive market.
Plus, lower initial instalments may ease the burden of car-related outgoings like maintenance, servicing and fuel.
The issue with these types of loans is that some foresight is needed but not always available. What we mean is that you are expected to earn more in the future (to cover large repayments later on), but none of us can accurately predict if this in fact will be the case. So while it’s a good tool to increase your purchasing ability, it does come with some added risk attached.
4) Cash Back Rebates
What is it?
Essentially a discount on the final sale price of the car, for example a car selling at RM60,000 with a cash rebate of RM5,000 would see the buyer actually purchase the car at RM55,000 only.
What’s not to like about a good discount, it’s satisfying to know that you are getting a car that is valued for more but selling for less.
The problem with too much of a cash rebate is that it might indicate something being wrong with your vehicle of choice. About 10% is nice, but too much of a reduction should have you questioning the reasons why. Is the deal too good to be true? If it is simply poorly selling because it is a matter of brand popularity or consumer preference, then it’s not a big problem.
But sometimes dealers offer huge rebates on models that were manufactured long before but have been sitting in their warehouse or yard for awhile. Cars, even new ones, left for long periods without being driven, risk having all kinds of problems.
When being offered a huge rebate, do check the year of manufacture and cross refer this date with news reports to find out if any other technical fault may be associated with the car in question.
5) Interest-free Limited Periods
What is it?
A promo that lets you make payments without interests for a specified amount of time, after which the agreed-upon rate will prevail and change your monthly repayment sum.
You can enjoy no interest costs in beginning of your tenure and therefore gain better affordability. Furthermore, you can utilise the interests you would have been paying to take care of other financial priorities or simply to cover the cost of car ownership.
This promo usually requires you to forgo other offers that are running simultaneously. For instance, if you choose to be interest-free for a time, you may not enjoy zero down payment and a cash rebate at the same time. Thus you are increasing your car’s sale price (without the rebate) or reducing affordability (without zero down payment). It may also extend total interests and prolong the tenure of your loan, to account for greater overall costs.
Offers like the ones mentioned above, can come to the rescue of those who desperately need a car but still require a little help getting there. These promos are usually only offered on new vehicles and differ from dealer to dealer. Some car companies offer a combination of the above and some may not. It's better to ask around before deciding.
It’s also important to understand that most of these promos tend to manipulate the numbers to increase demand on a particular car. But such tweaking sometimes results in higher interest costs, although the increase may not be significant.
Our advice is to look for affordability; now as well as in the future as a key factor with any loan you choose to take up. Finally, do shop around and properly research every loan promo you’re interested in, you’ll be helping yourself get the best possible deal!
If the dealer isn't so forthcoming on the car loan deals - check out our car loan calculator for car loans with attractive bank promos you can apply for on your own!