The enticing thought of being able to purchase a car on 0% finance is indeed appealing. However, there can be pitfalls, so it is worth looking in to the ‘deal’ thoroughly before committing. Obviously this is generally a substantial commitment financially and cannot be made lightly.
When you see an advertisement touting for 0% finance, you may initially think suspiciously about it. You may indeed think how can a finance company offer a loan without interest? However, it would appear that 0% is currently one of the most popular incentives there is. Just as cars are offered with money back rebates, dealerships can subsidise the financial arms of their corporations pre paying the loan interest on certain specific models.
The most common 0% finance deals are not usually extended as long as normal car loans, so a lot of car buyers opt for the more conventional loan in order to keep monthly payments at a lower rate. Even though they will in fact end up paying way more in the long run.
Zero percent finance is usually only available on a limited choice of models in a dealers stock. It seems that most zero percent deals apply only to cars on a dealers ‘lot’, and they may not include special option packages or indeed premium models.
If you are able to qualify credit wise for a zero percent deal, negotiating a lower price may be an uphill struggle. A good, reputable dealership will often be open to negotiation before actually applying the zero percent financing to your sale. There is, as with all things a deeper side to the zero percent subject. Often the people who are going to take advantage of a 0% deal are not the ones who need it.
Conversely, the ones who do need it can not qualify for it. Many buyers find themselves sitting across a desk from the dealerships salesman and find out that they just don’t qualify. Frustrating as well as embarrassing. That especially true if they have a moderate to low credit rating. Lets face it, many have, but they haven’t bothered to check it out before they got there.
Many buyers may be well in to the buying process when they find out that the 0% option just does not work for them anyway. So they may then take a route of less resistance and accept an alternative financing option from the dealers without too much fuss.
A lot of people find it to be very difficult to exit a sales discussion easily once their original plans have fallen apart. In this case people will then psychologically go with the flow.
As car makers will usually offer a rebate or zero % terms, it may be prudent for the buyer to take the rebate and use the financing that they organised for themselves to make the buy. In this particular way they can knock substantial amounts of money off the car and get a pretty low interest too.
It seems that buyers do not do well when they put trust in advertised low rate deals. Zero percent offers can save buyers money. They are there for an alternative reason and that is to sweeten a deal that will enable them to sell enough cars to keep the business running.
While plainly dealers do obviously need to make money, buyers have to \have their wits about them so that they aren’t in fact making a huge contribution to the dealers profit margins. Common sense really.