Is 0.00% auto loan financing always the best deal? Maybe not.
Consider the following example;
Saw a manufacturer’s offer of 0.00% financing or $3,000 off
the price of the car. Which is better for the consumer? Consider a $23,000
vehicle;
$23,000 financed at 0.00% interest for 60-months would be
$383.33 monthly. (Total of payments = $23,000)
$20,000 financed at 2.75% interest for 60-months would be
$357.14 monthly. (Total of payments = $21,428.40)
A credit union member financing that vehicle with the credit union at
2.75% (assuming they qualified for that rate) would save $1,572 over the loan
period.
Lending rates are already low now so a 0.00% rate does not
offer the savings that most people think it would when compared to a decent
rebate or price discount.
Another big advantage here is that the consumer would have
equity in the car and be in a much better position if they totaled the vehicle or
needed to sell within a few years. The key with any major purchase is to compare all available financing options and review the differences.
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