Zero percent finance: it sounds like a no-brainer, right? Buy now, pay later, and don’t pay a cent in interest. From car dealerships to electronics retailers, these deals are splashed across Australian ads in 2025. But is zero percent really the golden ticket to smart spending, or is there more beneath the glossy surface?
How Zero Percent Finance Works in 2025
Zero percent finance (sometimes called ‘no interest finance’) is a promotional lending arrangement where, for a fixed period, you pay no interest on your purchase. Retailers and lenders use it to lure buyers who might otherwise delay a big purchase. In 2025, these deals are common on cars, furniture, electronics, and even solar installations. Here’s how they typically work:
- Eligibility: Usually requires good credit and a minimum spend.
- Repayment Term: Often ranges from 12 to 60 months. Missed payments can trigger retroactive interest.
- Fees: Application fees, monthly account fees, or early repayment penalties may apply.
- End-of-Term Surprises: Some deals revert to high interest rates if not paid off in full by the end of the term.
In 2025, new ASIC guidelines require lenders to be clearer about these conditions, but not all offers are created equal.
The Real Costs: What’s Behind the Zero?
Zero percent doesn’t mean zero cost. Businesses aren’t in the habit of giving away money for free. Here’s where the real costs can hide:
- Built-In Costs: Retailers may inflate the sale price to cover the cost of finance. That ‘zero percent’ fridge or car might be cheaper if you paid cash and haggled.
- Upfront and Ongoing Fees: While interest is zero, you may pay establishment fees (sometimes $250+) or monthly account keeping fees.
- Missed Payment Penalties: Miss a payment, and you could be slugged with interest rates as high as 24% p.a. retroactively.
- Limited Negotiation: Cash buyers can often negotiate a better deal, while zero percent finance can lock you into the sticker price.
For example, in 2025, several major car brands have run zero percent finance offers, but those deals were limited to selected models with little room for price negotiation, and often came with higher insurance or add-on requirements.
Zero Percent Finance in 2025: Policy Changes and Consumer Trends
Australia’s regulatory landscape is evolving to address the surge in promotional finance offers. Here’s what’s new in 2025:
- ASIC Oversight: The Australian Securities and Investments Commission (ASIC) has increased scrutiny of zero percent finance advertising. New rules require prominent disclosure of all fees and conditions up front.
- BNPL Competition: The rise of Buy Now, Pay Later (BNPL) services has forced traditional zero percent finance providers to simplify their fee structures and reduce hidden costs.
- Sustainable Goods: In 2025, government-backed incentives for solar panels and electric vehicles can be combined with zero percent finance—so consumers should compare total out-of-pocket costs, not just interest rates.
- Digital Applications: More lenders now offer instant online approval, but be wary of oversharing personal data with less reputable providers.
Australians are savvier than ever, using comparison sites and online calculators to crunch the real numbers behind zero percent deals.
Tips for Making Zero Percent Finance Work for You
- Always compare the total cost (including fees) with the cash price.
- Read the fine print: What happens if you miss a payment or want to pay early?
- Negotiate: Ask if there’s a better deal for cash buyers.
- Use zero percent finance for essential, planned purchases—not as a licence to overspend.
- Keep track of your repayment schedule to avoid interest rate shocks at the end of the term.
Remember, the best deal is the one that fits your budget and needs—whether it’s zero percent, a cash discount, or a low-rate personal loan.
