0 Financing On New Cars

You’ve probably seen many ads on TV about 0 financing on new cars as many companies are trying to attract more customers with the help of these special deals. In most cases, lenders offer the best credit terms and interest rates to people that have the highest credit rankings (somewhere between 680 and 720).

If you’re interested in this deal, you must first improve your eligibility by giving your credit score a well-deserved boost. For this reason, you’ll have to find out at which a lower credit rating will dictate that you’ll get less suitable credit terms and interest rates. You should get a credit report copy in advance and make sure that your credit score is at least 680 – this will increase your chances of getting qualified for the best deal offered by the car dealership. Needless to say that in order to improve your credit score you should fix any mistakes that you stumble upon.

You’ll need to do a little bit of math in order to find out the savings available if a car dealer offers you a choice between a no-interest / below-market interest loan and a cash rebate. If you apply the entire lump sum cash rebate to the down payment, you might save more in comparison to no-interest financing. Also, some of the car dealers will try to trick you by offering 0% financing only for the first year of the loan which is why you need to read the deal very thoroughly and check to see if this “offer” is available for the entire period of the loan or not.

Of course, you will need to put everything in writing. Although you will figure out the basics of the loan with the salesman, the deal is not official until you have a financing contract from the dealer’s finance office. It would be recommended to go straight to the dealer’s finance person in order to save time.

Just like the rest of any financial deals, you will need to read out all the small print and be careful at potential “catches”, like if you are late with a payment, from that moment on you’ll have to pay more every month.

Of course, this offer sounds very attractive: purchase a car and then pay it back over time interest free. However, there are some pitfalls which you certainly should be aware of prior to picking out this type of car financing, here are a few:

a)      Few models are eligible – you’ll need to check out the deal with great attention as many offers are available only for selected models;

b)      Short loan term – some of these 0 financing on new car deals are too short for some customers. If you choose a 42-month contract it means that you will be making some high monthly payments in comparison to a 72-month contract where the monthly payments are considerably lower and more acceptable;

c)       High price tag + no room for negotiation – there are many car dealers that will not allow any negotiations for cars that are eligible for this offer plus these models have a high price tag. In some cases, it would be better to get regular financing and do a little bit of negotiation with the salesman. Again, you’ll have to do some math to figure out which method is more affordable for you;

d)      Rebate not available – although many dealers will advertise that they offer both 0% financing and a rebate, if you read the small print, you’ll find out that you can choose one or the other, meaning that you can’t have them both.

In conclusion, although it sounds very attractive, 0% financing on a new car can be a little bit tricky and you might end up paying more than usual. Take time and do a little bit of comparison shopping before making a final decision.

Post tags: Tags: 0% financing, automotive articles