Zero Percent Financing: A Consumer Benefit Or A Marketing Trick?

In recent years, zero percent financing has become an increasingly popular financing option offered by most car manufacturers on new cars and trucks. While it does sound great and is extremely appealing to many car buyers, there are few things attached to it that may diminish the benefits.

Commonly, car dealers offer an alternative of a zero percent financing or a cash rebate on the vehicle purchase price. Let us say, that you are confronted with an offer of getting a cash rebate of $3,000 or a zero percent financing. While you are going to have no interest to pay, you will end up paying $3,000 more for a vehicle that you may have saved otherwise. Should you pay off your loan early, the advantage of taking zero percent financing would become null.

It is important to keep in mind that any car is a quickly depreciating asset. Taking a rebate instead of a zero percent financing incentive may help you to reduce the gap between the loan balance and the vehicle fair market value. Since your car depreciates most in the first year of use, having it totaled or stolen may leave you upside down on your zero percent auto loan since your insurance company would not cover extra $3,000 you paid for your vehicle. That means that you would have to come up with the difference to cover the remaining loan balance.

It is important to remember that nothing is truly free in this life. Financing incentives, typically coming from the corporate offices of car manufacturers, are most commonly hidden in the vehicle selling price. Car dealers, sometimes offering zero percent financing on their own, follow the same strategy.

How Does It Work?

While it is somewhat understandable how financing incentives offered by auto manufacturers work, zero percent financing offered solely by a dealer may raise your eyebrows. Obviously, banks are not going to finance you at no interest, no matter how good your credit is, since they have to make money off you to stay in business.

What usually happens is that auto dealers rebate the bank upfront for the interest charges that a customer would accrue and pay to the bank otherwise. In simple terms, your dealer pays your interest for you. Since they are not going to make it a money-losing proposition, they have to compensate these expenses somehow. That is why these costs are built into the vehicle purchase price.

Typically they are offset by a rebate that a car manufacturer would give you on a new car purchase and/or an incentive that an automaker gives a dealer for higher volume sales. What this also means to you that there is less negotiation power on your side, since a dealer would be less eager to go down on a vehicle price in this case.

Financing Incentive or a Cash Rebate?

What this means to you is that a simple mathematical equation needs to be solved. When approached with a choice between the rebate and a zero percent financing, calculate how much interest you would normally pay on a car loan and compare it to the amount of rebate. If your interest charges are going to be greater, it may be time to consider zero percent financing. Should they be not, take the rebate and run away from the zero interest deal!

Scam Artists Want To Finance Your Next Car!

If you have shopped online for car loans recently you may have found hundreds of tempting offers. Many offers promise you guaranteed financing regardless of credit history, bankruptcy, divorce, and the end of the world … (well maybe we exaggerated that one a bit), but you get the idea.

Presently, over 100,000 people per day apply online to receive car loans from companies that promise financing with bad credit or no credit. What you need to be aware of is that not all of the websites out there are legitimate. If you are unfamiliar with the term, “Phishing Website” you should Google it today and learn what it is. You could be giving your information to someone that wants to steal your identity!

You might think, “Well if I have bad credit, then who cares if they steal it, won’t do any good for them anyhow.” That is not entirely accurate. Once they determine that your credit will not work, maybe your medical information will. Medical identity theft is rapidly growing due to increased health care costs and outrageous insurance premiums.

We recently heard of a victim who after applying for several car loans with no luck, and no return calls, she began receiving collection notices from a cancer treatment clinic in California. Since she lives in Maine, and is physically unable to travel, she got concerned.

Several months later, and several thousand dollars in attorney’s fees she found out that her social security number, income information, birth date, and other pertinent information was harvested from the internet and sold to scam artists that know how to generate medical insurance cards good enough to pass the “adequate” hospital screening process. All of this information harvesting was tracked to a website offering “guaranteed auto financing regardless of credit or income history”.

The worst part is her blood type was changed, because the person receiving cancer treatments on her information was type B and she was type A. Had she not caught this before going in for emergency treatment, she might have been pumped full of the wrong blood!

The moral of the story is, if you do not have the best credit and you want to get financing for a car or any other item, do some digging first to check on the credibility of the source you are working with. Your best bet will most likely be finding a dealership or local financing company that works with people to reestablish credit; or has other programs available that will fit your situation.

The Ultimate Way To Find Ideal Car Loan Broker Quotes

It’s applicable to look around for that broker with the ideal car loan interest rates. Using this method, you are making sure that you get the offer that you’re most comfortable with.

Mortgage rates for autos are usually influenced by 2 factors: the length or term of the loan that you’ll be borrowing, and the amount that you plan on borrowing. Although it may seem easy to think about these factors when choosing a vehicle loan rate, it’s a struggle to determine how much money you need to borrow as well as the obligations which will be made. That is why you need to take advantage of the very helpful financial tool – car finance calculator.

This type of loan calculator will assist you in determining the number of installments that you need to make after borrowing particular amounts of cash. These types of calculators offer an simple to use interface; all you need to do is input your data and then the calculator is going to do the rest.

When choosing the rate of the automobile loan, the car loan broker, might allow you to borrow much more cash, for things you may want. Say for instance, you want mechanical breakdown guarantees, thorough auto insurance and others factored into the price. The car finance proposal will then be accepted by the financing company with the approval of the company’s broker. One thing to make note of here is that if passed, you still will have to pay money for the borrowed funds in the equivalent amount of time put down upon the agreement.

It is also vital that you always keep in mind that the prices differ; dependent on whether or not the mortgage is unsecured or secured. Personal unsecured loans are charged rates of interest which are a lot higher as compared to mortgages that are secured. You might perhaps find yourself obtaining ample cash to cover the car’s insurance plan should you choose secured loans to generate the most of their cheaper rates of interest. If you choose to sell your vehicle, you will have to balance the borrowed funds. Sad to say, not all loan providers are kind enough to offer finance intended for old vehicles such as 7 years or beyond.

It is possible to figure out the particular interest rates for any car loan through the location from where you will be taking your car from. Automobiles which are imported are not a preferred selection for the majority of car loan financiers; which make the whole procedure more tasking than usual or perhaps at times, utterly impossible. If you’re within this situation, receiving an unsecured loan is the ideal move to make.

An excellent car loan broker will assist you in finding the ideal financing alternatives for you. If this type of broker is knowledgeable with the current prices in car finance choices, they will surely make it all easier. The type of rates of interest that you will get can also be affected by the kind of car loan broker that you apply in finding the ideal deals available.