Hard Facts About 0% Financing
Zero percent financing is becoming more and more common in the auto industry and for other major purchases like furniture and appliances. It may seem like a great deal but when you consider other factors, 0% financing may not be your best option. These offers are often used to “bait and switch” customers since it can be very hard to qualify for the rate. A large down payment may be required as well. Once the dealership or retail business is able to get you into their finance department they may try to pressure you into a higher rate.
Compare Your Options
Taking the 0% financing will typically require you to forfeit the rebate money and/or your ability to negotiate a better price. The rebates and/or discounted pricing could save you hundreds, even thousands of dollars over the term of the loan as shown in this example of 0% APR1 from an auto dealership compared to St. Paul Federal Credit Union’s best rate on a new vehicle with the rebate.
| St. Paul Federal Credit Union | Auto Dealership | |
|---|---|---|
| Price | $18,995.00 | $18,995.00 |
| Dealer Rebate | $3,000.00 | $0.00 |
| Finance Amount | $15,995.00 | $18,995.00 |
| Payment | $287.35 | $316.58 |
| Finance Charge | $1,245.54 | $0.00 |
| Sales Tax | $1,040.00 | $1,235.00 |
| Total Cost | $18,280.54 | $20,230.00 |
| Total Savings | $1,949.46 |
This is just one example of the possible savings when choosing the rebate and/or discounted price over seller financing. Stop in and talk with a Member Service Representative and compare your options. We’ll find out what the best route, whether it is taking the 0% or taking the rebate and/or negotiating for a better price, and help to get you the best possible deal on your new car or other major purchase.