You see the advertisement on a billboard or social media, and it sounds like the deal of a lifetime: “0% Interest on Your New Car!” It feels like you’d be getting free money. After all, who wouldn’t want a loan without paying a single Taka in interest?
This “0% APR” (Annual Percentage Rate) offer is one of the most powerful marketing tools in the global auto industry. Car dealerships and manufacturers use it to get you excited and bring you into their showroom.
But here is the hard truth they don’t want you to know: the 0% offer is almost never the best deal. Dealerships are businesses, not charities. If they aren’t making money on the interest, they are making it up somewhere else. Here’s where the costs are hidden and how you can avoid falling into the trap.
What is a “0% Interest” Offer, Really?
On the surface, it’s a loan where you only pay back the principal amount you borrowed for the car, with no added interest charges. If the car costs 25 Lakh BDT, you pay back exactly 25 Lakh BDT over the loan term. It’s offered directly by the car company’s own financing division, not a traditional bank. They do this to achieve one primary goal: to sell more cars, especially models that aren’t selling quickly.
The Hard Truth: 4 Hidden Catches You Must Know
Before you get tempted by that zero-interest offer, you need to understand the trade-offs. The money you “save” on interest is almost always paid in other ways.
1. You Pay a Higher Price for the Car
This is the most common catch. When a dealership offers 0% financing, they are usually unwilling to negotiate on the car’s sticker price. Any discounts or bargaining power you might have had are gone. The amount you could have saved by negotiating the price is effectively the interest you end up paying.
Example: A dealer might sell a car for 28 Lakh BDT with a regular bank loan, but their non-negotiable price for the 0% financing offer is 30 Lakh BDT. That 2 Lakh difference is your hidden interest cost.
2. You Lose Valuable Cash Rebates and Discounts
Often, you are presented with a choice: “Take the 0% financing OR get a big cash discount.” That cash discount (e.g., a 1.5 Lakh Taka rebate) is only available if you do not take the 0% offer. Nine times out of ten, taking the cash discount and getting a low-interest loan from a separate bank will save you more money overall.
- Do the Math: Always calculate the total cost for both scenarios. You’ll likely find that a 7% loan on a discounted car is cheaper than a 0% loan on a full-price car.
3. Only a Tiny Fraction of Buyers Actually Qualify
This is the classic “bait and switch.” The 0% interest offer is used to lure you into the showroom. However, the offer is typically reserved for buyers with a flawless financial history—a perfect CIB report, a very high and stable income, and a long credit history. The vast majority of people don’t qualify. Once you’re there and invested in a car, the dealer will then offer you their standard, often high-interest, financing plan.
4. The Offer is Limited to Specific, Unpopular Models
You won’t find a 0% offer on the hottest new SUV that everyone in Dhaka wants. These deals are almost always used to clear out old inventory—last year’s models, cars with less popular features, or colors that aren’t selling well. You have to sacrifice your choice of vehicle to get the deal.
The Smarter Alternative: How to Get a Genuinely Great Deal
Don’t play the dealership’s game. Create your own.
- Get Pre-Approved from a Bank First: Before you even visit a showroom, go to 2-3 banks or NBFIs and get pre-approved for a car loan. This tells you the best interest rate you genuinely qualify for and exactly how much you can afford.
- Negotiate as a “Cash Buyer”: Walk into the dealership with your pre-approval letter in your pocket. Tell the salesperson you have your own financing arranged and you want their best possible “cash price” for the car. This forces them to be competitive on the vehicle price and offer you any available cash rebates.
- Compare the Real Numbers: Once you have the lowest possible price for the car, you can then accurately compare your options:
- Option A: The dealership’s 0% offer on their higher, non-negotiable price.
- Option B: Your lower, negotiated car price combined with the interest from your pre-approved bank loan.
You will almost certainly find that taking the discount and using your own low-interest loan (Option B) is the cheaper choice.
Conclusion: Be Prepared, Not Fooled
A “0% APR” offer isn’t a golden ticket; it’s a marketing strategy designed to move metal. The real path to saving money on your next car is through preparation, not chasing flashy deals. By securing your own financing first, you walk into the dealership with all the power, ready to negotiate the best possible price on the car you actually want.