We’ve all heard of buying a TV or fridge and not having to pay a cent until next year, but Hyundai has taken it a step further this month with a no-deposit-no-payment-until-2015 deal on any new Hyundai. The question is, do the figures stack up, and is there a catch? Tony Bosworth investigates.

They say there’s no such thing as a free lunch, so even we were initially skeptical about Hyundai’s latest deal – believed to be a first in the Australian market and running all of November – offering a deferred finance scheme which sees no payments at all for the first year of new car ownership.

One major non-Hyundai dealer we spoke to even said, “that’s impossible, there must be a catch”.

Well, here’s how it works. You go and choose any new Hyundai, negotiate the price and then drive away in the new car, with no payments to make for a whole year – until January 2015. There is no balloon payment, and you can get the deal without even making a deposit. The catch? Well, firstly of course you need a half-decent credit rating, but that’s true for any loan you might want to take out, so no catch there really.

During the first year of non-payments, interest is added to the principle amount, so come 2015 you start making bigger payments – over a 47 month period – than you would if you started those monthly payments from the month you drove off in the new Hyundai (over 60 months).

As an example, if you were to buy a new Hyundai for $28,000 your monthly payments if you opted to start paying from month one would be around $614, but rising to approximately $830 a month if you don’t pay anything for the first year.

The monthly amounts can vary a little because finance provider St George Bank varies the interest rate slightly depending on your credit rating. Basically though the annual percentage rate is around 8.6 per cent, which is pretty good compared to a normal bank loan, currently tracking (at the time of writing – November 2013) at around 13.5 per cent-plus.

Other costs are a one-off $375 establishment fee and, if payments are made by monthly direct debit, there’s an additional $5.75 a month, but these amounts are included in the monthly figures quoted above.

“This is not a deal that suits every potential buyer,” cautions Bill Thomas, Hyundai’s General Manager, Public Relations, “and everyone should carefully read the terms and conditions, but for some buyers it can work. We would never say to people that you should enter into it and expect to be paying less for a car, because you will pay a bigger repayment amount per month when payment is deferred. It just gives customers flexibility.”

Mr Thomas said Hyundai didn’t know specifically what difference the new finance deal might make to overall sales at this stage but he said the company is on track to sell 97,000 new Hyundais by year end, which would potentially move them into fourth position on the Australian new car sales chart.

In October, Hyundai sales were ahead of Mazda, Ford and Nissan.

We’ll be interested to see if other car manufacturers start offering similar finance deals.