Should I take the zero-percent financing that dealers offer?
When it comes to zero-percent financing, is zero really your hero? There are many factors to consider before driving off with a zero-percent auto loan.
When it comes to zero-percent financing, is zero really your hero? While you may be eager to accept this popular offer from dealers, there are many factors to consider before driving off with a zero-percent auto loan.
What is zero-percent financing?
The financer is lending money to the buyer without charging any interest over the life of the loan. It’s common for dealerships to offer incentives like zero-percent financing or a rebate, especially for slower-selling models, or to make room for newer models.
Which offer should I choose: zero percent or a rebate?
Combining a shorter term, like 36 months, a low-interest rate, and a rebate can potentially fuel your savings more than a zero-percent offer.
New Auto Loan: $30,000
Term | 36-months | 60-months |
|---|---|---|
Sales Price | $30,000 | $30,000 |
Rebate | $-2,500 | $0.00 |
Net Price of Car | $27,500 | $30,000 |
Interest (%) | 1.90% | 0% |
Interest ($) | $900 | $0 |
Loan Amount + Interest Repaid | $28,400 | $30,000 |
Savings | $1,600 | $0 |
Before you head over to your nearest car dealership or check out their online inventory, get a precise picture of which option could save you the most money with our Rate vs. Rebate Calculator. Another recommendation? Make sure you’ve determined how much you want to contribute for a down payment, and start building a savings plan to decrease the amount you finance.