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Dollars and "Sense" Column
0% financing: Look before you leap!
Zero-percent financing is everywhere, but there’s more to consider when buying a car.
Remember when you were young, you were always told, “If it sounds to good to be true, it probably is!” This is the best way to describe 0% financing. Consumers streamed into dealerships in large numbers to take advantage of the “deal of a lifetime.” However, less than one third of buyers who wanted zero-percent financing were able to qualify. One reason is the best financing rates are reserved for the good credit buyers. As a result, more new vehicles were sold, flooding the pre-owed market with trades.
Despite urgent-sounding advertising, there are many more factors to consider when buying a car than just financing.
Any deal is only as good as the automobile you are buying.
That’s why it’s important to do research on the car first and foremost. Making a decision on the vehicle you will buy simply because it’s offered at zero-percent financing is asking for trouble.
Read reviews, do a thorough test drive, check safety records, and check for features you want. Saving a few dollars a month on interest won’t pay off if you don’t like the safety, comfort or convenience of the vehicle you select.
Keep in mind that automakers often use aggressive incentives to move inventory. They may be
slow selling models or others that they need to move off the dealership's lot.
Don’t forget to compare all elements.
If you qualify for the zero-percent financing, you will probably be offered the car at MSRP pricing. At everyday finance rates, many dealerships may be able to work out a win-win price
agreement that will save you money in the long run, even without zero-percent. Many consumers that obtained zero-percent financing are now experiencing a significant loss of value in the market assessment of their vehicle. Retail and wholesale, as well as trade-in values, have been
substantially affected by the over abundance of availability on pre-owned vehicles. We all know
the automobile does not appreciate in value. Now, more than ever, it is very evident that the values are depreciating at a more rapid rate.
It all goes back to where we started…. if it sounds to good to be true, it probably is!!
Happy motoring.
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