0% Car
Financing - Zero Percent Financing - Is it the best Deal?
Zero percent car financing for
automobiles has been around for
years and works as a successful
marketing campaign for Canadian car
dealers who want to stimulate New
Car sales. It is such a successful
and powerful sales tool that other
industries have copied it such as
the furniture and credit card
industries. Research shows that only
a third of buyers who apply for 0%
car financing actually qualify and
only 10% of those close according to
the National Automobile Dealers
Association (NADA). This means that
the person applying for 0% Financing
must have Perfect Credit to qualify.
Many of those who qualify for zero
percent financing severely overpay
for their new vehicle because they
don't negotiate the price. They
assume that because they are getting
zero percent financing, there is no
other incentives available such as a
discount. Do you think 0% car
financing will give you the best
deal? The 0% offer is almost always
accompanied by the “or Cash Rebates
of $5,000” clause. That $5,000 cash
you lose by opting for the
manufacturers 0% financing is the
actual cost of borrowing. This often
works out to car loan rates that are
much higher than traditional car
loan rates. Here is an example:
|
Annual % Rate |
0% |
6.95% |
|
Cost of Car |
$29,000 |
$29,000 |
|
Less Rebate |
$0 |
$5000 |
|
Amount of Finance |
$29 000 |
$24 988 |
|
Monthly Payment |
$625 |
$596 |
|
Total Cost |
$29,999 |
$28,608 |
|
Savings |
$0 |
$1391 |
|
* based on 48 months |
|
* an actual car found on
the internet - 2005 mid
size sedan |
It is easy to see which is the
best auto loan rate. Now let’s
look at the same vehicle but pre
owned with only 10 000 km on it.
Remember you are only qualified
for new cars when it comes to 0%
car financing.
|
Annual % Rate |
0%(new) |
6.95%(pre-owned) |
|
Cost of Car |
$29,000 |
$19,999 |
|
Less Rebate |
$0 |
N/A |
|
Amount of Finance |
$29,000 |
$19,999 |
|
Monthly Payment |
$625 |
$478 |
|
Total Cost |
$29,999 |
$22,944 |
|
Savings |
$0 |
$7,055 |
|
* based on 48 months |
|
* actual car found on
the internet – 2005 mid
size sedan |
It's clear and obvious that the
better deal is taking the 6.95% rate
rather than the 0% car financing. Do
your research before buying into
these so called special deals.
Apply online and get pre-approved
for your New Car Loan today! We'll
show you the best bank rates vs. the
0% on the same vehicle. Before you
make any decisions, get educated by
a company that cares.
