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Car finance offers not always what they seem

It pays to do your sums before signing up for car finance.

With 2014 clearance sales likely to continue for the next month or so it's worth doing your sums on the numerous finance offers.

In recent years several brands have offered super-low (0 or 0.5 per cent) interest rates, only for customers to find the deal applies to the full on-road cost of the car, which can easily add $5000 to a $20,000 car.

In most cases it was cheaper to haggle a sharp price on the car and arrange your own finance.

Interest is calculated from the day you sign the deal

Now there are a couple of new finance offers to review with care. Holden's "no deposit, no repayments until 2016" is one.

The interest is calculated from the day you sign the deal, even if you defer the first payment by 12 months.

On a $38,990 Colorado ute, for example, the repayments are $1122.44 per month for four years (for a total payout figure of $53,877) if you defer the first payment until 2016.

Start paying the loan back immediately on the same 9.9 per cent rate underwritten by St George on behalf of Holden, and the monthly repayments drop to $1017.54 for a four-year total of $48,845.

By comparison, a 7.99 per cent finance rate via Esanda, also quoted at a Holden dealer, is $986.75 per month for a total four-year payout of $47,364.

Ford is offering 2.9 per cent finance, but the catch is you must stump up 10 per cent of the loaned amount as a deposit and, as with the Holden offer, the loan must be repaid in full in 48 months.

Many buyers can't meet these terms and, in the case of Ford, popular models such as the Ranger ute, XR8 sedan and Transit van are excluded from the offer.

As ever, it pays to read the fine print. In most cases the best deals are the super-sharp drive-away prices.