Zero per cent finance can cost more

Low-interest-rate deals are starting to reappear as car companies attempt to disguise price rises driven by a weaker Aussie dollar, or mask heavy discounting on slow-selling models.

Either way it can be confusing for car buyers trying to determine if it's a good deal or not.

In many cases it can be better to haggle a sharp price and arrange your own finance outside the dealership. But sometimes the deals in the showroom do add up.

We did some number crunching on one deal.

At least one leading brand is currently offering 0 per cent finance on quite a high retail price of $24,990 drive-away for a small car that has in the recent past limboed to $19,990 drive-away.

At 0 per cent finance over five years the $24,990 price would cost $417 per month, presuming there are no other hidden charges or establishment fees.

Make sure you find out the total interest and total amount you will repay over the life of the loan

But what happens if you buy the car at $19,990 drive-away and arrange your own finance?

If you have a good credit history, you may be able to wrangle a rate of 8 per cent. According to online calculators, that works out to be $405 per month over five years, paying $4329 in interest, bringing the total cost of the car to just $24,319.

It always pays to get more than one quote. Make sure you find out the total interest and total amount you will repay over the life of the loan.

Dealers often make more profit from finance deals than they do from the sale of the car itself.

One more tip: don't just look at the monthly repayment figure (finance experts can make this figure look small by stretching the repayment terms, which means you pay more interest for longer).

The longer the repayment period, the greater chance the payout figure will be more than what the car is worth at trade-in time.