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0% financing on car--is there a catch?
Posted on 1/6/14 at 6:38 am
Posted on 1/6/14 at 6:38 am
Thinking about buying a car today (following Will Cover's advice, of course) LINK but wasn't sure if the 0% financing is also a scam or if there is a catch I am not seeing. Toyota is offering it and today is the last day.
9
Posted on 1/6/14 at 6:41 am to CorkSoaker
I don't think so. Your credit has to be excellent to get the 0% and normally there are certain terms on the length on the loan when you do 0%. I think it may depend on the lender. when we bought my wife's car from Honda it was 0% for 48 months or 1.9% for 60.
Posted on 1/6/14 at 6:44 am to CorkSoaker
0% is always free money, but there is a catch. The catch is that they don't come off the sticker price much at all for the 0% incentive. Financing options often vary as they inch up percentage points while the sell price decreases.
Posted on 1/6/14 at 6:44 am to CorkSoaker
You usually don't get all the rebates if you go the 0% route.
Posted on 1/6/14 at 6:45 am to CorkSoaker
Sometimes there is a choice between 0% or a couple of thousand cash back.
Posted on 1/6/14 at 6:47 am to CorkSoaker
Sometimes a dealer will cut more off sticker if they're making a bundle on the interest.
In this case, they may not reduce the price as much in order to make money off the sale and not the finance.
In this case, they may not reduce the price as much in order to make money off the sale and not the finance.
Posted on 1/6/14 at 6:53 am to CorkSoaker
No catch other than you are borrowing more up front. The first few years you will be "upside down". But you won't have spent several grand up front.
You will still have some fees due at signing that can't be rolled into the financing. But if you plan on keeping the car 7-8 years - borrowing money for free is usually a good thing.
You will still have some fees due at signing that can't be rolled into the financing. But if you plan on keeping the car 7-8 years - borrowing money for free is usually a good thing.
Posted on 1/6/14 at 8:01 am to CorkSoaker
More often it's best to take the rebates instead and find your own financing
Dealer will probably offer you something higher than you can find on your own
Dealer will probably offer you something higher than you can find on your own
Posted on 1/6/14 at 1:28 pm to CorkSoaker
I bet you can make a better deal on the price without the 0% financing. Offer 5-10% less using traditional financing.
The lenders are charging the dealer to provide that 0%.
The lenders are charging the dealer to provide that 0%.
Posted on 1/7/14 at 11:24 am to CorkSoaker
They get you in the door and get you to agree to a price with the 0% financing. Then you meet with the finance manager. He will then push like hell for you to take the 0.9% - 1.9% financing.
Technically, you save a LITTLE money doing it this way IF and only IF you plan on paying it off early by paying extra each month. But then you don't have the flexibility to pay less if you get in a pinch.
My advice: get the 0% financing and still pay it off early.
Technically, you save a LITTLE money doing it this way IF and only IF you plan on paying it off early by paying extra each month. But then you don't have the flexibility to pay less if you get in a pinch.
My advice: get the 0% financing and still pay it off early.
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