I don't know about auto financing specifically, but in general 0% financing for X amount of time generally means that you actually pay all the interest as soon as that X amount of time is up. For example if you do 0% financing for 4 years but it's a 5 year loan with 2.99% interest then the entirety of that 5 years and 2.99% interest is paid during the 5th year. It's all a marketing gimmick. Now, you can pay the car off by the 4th year and as long as there are no penalties it works out as actual 0%.

Also, as said with 0% loans they usually don't give any rebates. So know what you are getting into.

Yes, I mean investing the money for 47 months and then paying the loan off on the 48th month would work out as you planned.

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Posted by achenator

Member since Oct 2014

2957 posts

Posted on 11/22/16 at 8:48 am to baldona

quote:
I don't know about auto financing specifically, but in general 0% financing for X amount of time generally means that you actually pay all the interest as soon as that X amount of time is up. For example if you do 0% financing for 4 years but it's a 5 year loan with 2.99% interest then the entirety of that 5 years and 2.99% interest is paid during the 5th year. It's all a marketing gimmick. Now, you can pay the car off by the 4th year and as long as there are no penalties it works out as actual 0%.

No that's not how 0% car loans work. You are thinking of "same as cash" type loans for furniture and stuff like that. Car loans are just 0%. But you are right about the incentives.

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Posted by LNCHBOX

70448

Member since Jun 2009

84306 posts

Posted on 11/22/16 at 9:48 am to baldona

quote:
I don't know about auto financing specifically, but in general 0% financing for X amount of time generally means that you actually pay all the interest as soon as that X amount of time is up. For example if you do 0% financing for 4 years but it's a 5 year loan with 2.99% interest then the entirety of that 5 years and 2.99% interest is paid during the 5th year. It's all a marketing gimmick. Now, you can pay the car off by the 4th year and as long as there are no penalties it works out as actual 0%.

That's not how it works for cars. Both vehicles in my household are on 0% loans. On both, we negotiated the price, add in whatever taxes and fees, and divide that number by the number of months. There is no gimmick to it. I also got all incentives offered on top of the 0%.

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