Zero Percent Car Financing a Good Deal?

Maybe, but learn all the details before you sign!

Offers of 0 per cent auto financing sound so good that many buyers don’t really see if it’s the best deal for them!

The zero per cent car finance offers have been around for a number of years. Originally conceived to bring traffic to empty dealer showrooms, they have become standard fare for manufacturer’s TV ads. What the fine print says, however, ends up disqualifying between 90 to 95% of the people who hurry down to their local car store to take advantage of an offer that almost seems too good to be true!

The “devil’s in the details” with 0 financing on cars!

Why do manufacturers offer 0 per cent car financing?

• To qualify for most zero per cent financing on cars offers, a buyer must have excellent credit!
• Typically you must accept delivery from dealer’s stock, in other words you may not get the vehicle you want, you’ll get what they have!
• Cars on 0 finance is usually offered on slow moving or poor selling models, not on the entire vehicle line.
• In order to obtain zero interest car loans you must forego any rebates on that vehicle
• Down payments of as much as 25 to 30% may be required
• Length of contract is often shorter than that which would be offered with regular financing

Does this automatically make it a bad deal? No, free money is still free money, but there are some other details which can make these offers unattractive. New car dealer’s typically make money on the financing of a car, if they don’t get this income they may very well make it up by charging more for the car. The price you pay could be higher than what you might pay for the car with more conventional financing.

Too often, buyers are thrilled by the zero interest car loans and pay less attention to the price paid. Another feature, shortened contract terms, often only 24-36 months on cars with zero financing, can make the payments higher than the buyer can comfortably afford. Yes, the money’s free but the higher price and larger payments may be drawbacks to this sort of 0 interest car loans deal!

Poor Credit and Used Cars don’t have 0% options!

The economy has significantly hurt the buying power of the American public, and many people who might have qualified for zero finance on new cars several years ago, no longer can. Credit scores have dipped and where 10% of buyers might have qualified for zero per cent car loans a few years ago that number has dropped to less than 5% by some estimates. Those “teaser” rates still attract buyers, but they often get to the dealership only to be told that they don’t qualify. They are then offered deals which are much less attractive, but fall prey to dealers who make them think they are doing them a favor by selling them any car at all.

Used cars have become a popular choice for many buyers who once bought new, but unlike the new cars for which 0% financing is available, no such zero finance on used cars exist. Again, as in the previous example buyers attracted by the zero per cent auto financing offer end up making a deal which they may find is to the dealer’s advantage not theirs

Do your homework before you go out car shopping!

Like most everything in life, you can never know too much! Doing your homework and thinking through what you need and can afford before you leave your home can prevent you from making a big financial mistake. There are a number of websites where you can get information about dealer pricing. Other information about interest rates and terms are also available.

CarloanZ can provide you with a free quote on auto financing rates and terms. We’ll provide you with financing information for credit of all types and help you make the best choice for you. If you make use of these resources you’ll get the best deal on the vehicle and the financing you want! Zero per cent auto loans sound too good to be true and sometimes they are!