Zero Percent Financing Auto Loans: Are They Worth It?

Zero Percent Financing Auto Loans: Are They Worth It?

Several television ads have recently driven the concept of zero percent funding for different new vehicles. An offer allows consumers to fund a new SUV for a 72 month loan, interestfree. On the surface, this offer looks hugely appealing and it may be for you if you are the right consumer. Have you considered buying a car with zero percent financing? If so, you must completely explore exactly what you get with this type of loan or you can stop catching in a mess of a mess!

Buying a vehicle that has interestfree financing will get your attention. What better way to buy a vehicle then pay back over time interestfree. However, there are some pitfalls you must be aware of before choosing this type of new vehicle financing and they include:

Few models offered Check the agreement carefully and you can learn that only one or two major SUVs qualify for this special financing offer. Of course, if this is the vehicle you want to continue then read. If not, you must pay the market funding rate for your compact car or crossover car.

Your loan period is too short Some interestfree offers have loan terms that are too short. A 42 month term means your monthly payments will be very high while a 72 month period spreads out the costs and reduces your monthly payments.

High Sticker Price, No Negotiation To get zero percentage funding, the car dealer may be less willing to obscure with the price. The $ 35,000 SUV already has a $ 8000 mark up in manufacturers and retailers profits. In addition, if you buy it at the end of the model year, its value has already fallen significantly. In the end, you can do better by simply taking the discount together with negotiating a lower price. If you still need financing, youll probably find a decent pace somewhere else.

Im up and down! There is a financing period that many customers are unaware of, which can hurt you later, especially if you plan to shop in the vehicle sometime before it is paid. Being up and down means that you owe more money to the vehicle than it is worth. This can happen if you spend a little or no money on the vehicle and finance close to the full amount.

After two years, you may think you are making great progress when you pay down the sixyear loan. But you can be too rude awakening if you decide to shop your car, as the depreciated value has fallen faster than your payment amount. Thus, your SUV can be worth $ 15,600 on trading, but you are still owed $ 18,100 on your loan. This lack of $ 2,500 has to get out of pocket to fully satisfy the loan. At this time, you may want to roll this amount over to a new loan or simply pay it out of your pocket in place it will either cost you a lot!

Obviously, if you plan to keep your vehicle for more than six years than there is no reason for you because the loan will be paid and your vehicle will still have some value for it.

So, is there anyone who can benefit from a zero percent loan? Yes, there are and they are the ones who have the money to pay in cash for their vehicles. With zero percent funding, there are these types of consumers who recognize an opportunity when faced with them and decide to let the finance company finance their business. Then, instead of plucking down $ 28,000 for a new SUV, they keep their money at the bank, earning 5% or better interest rates, which would result in a balance of over $ 36,400 at the end of six years. Look at it in another way, you can subtract $ 9400 from the vehicle price and it would be like paying $ 18,600 for the purchase! All they have to do is pay their monthly invoice and extra money goes in their pockets.

Sure, most consumers can not afford this option, so its important for you to learn all that is available to know about your auto loan call before logging on to the dotted line. If you can negotiate the lowest price and get zero percent funding on top of it, than you have a deal that is worth your persecution.

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