Zero Percent Auto Financing: Separating Fact From Fiction

“It seems to happen with growing frequency these days.  Automotive ads scream out from practically every newspaper, radio and TV offering consumers a deal they simply can’t refuse:  “Zero percent financing on the vehicle of your dreams.”

But, consumer’s dreams of driving off in their ideal set of wheels can quickly fade when they arrive at the dealership.  Many, in fact, leave empty-handed or end up saddled with loans at higher interest rates than they could have secured on their own.

Statistics reveal that only about one-third of buyers who apply for zero percent financing actually qualify -- and only about 10 percent actually wind up taking the deal, according to the National Automobile Dealers Association.  Even the zero percent qualifiers face potential roadblocks.

So, in spite of the tempting offer, zero percent financing promotions aren’t always the best route for car buyers to take.  Still, money-saving options are readily available in today’s incentive-laden marketplace.”*

Many car buyers don’t realize it, but there’s a quick and convenient way to secure vehicle financing by visiting the Bloom Township High School Credit Union.  In some cases, a low financing rate (as offered by the credit union) teamed with  a rebate can even beat a zero percent financing offer.  Consider the case of the consumer who trades in his/her existing car for $4,000 and applies the equity to the purchase of the $20,000 car.  With zero percent financing and no rebate, the consumer would have a monthly payment of $444.44 and a total cost of $16,000 over 36 months.  If the same buyer financed through the credit union at our 4% rate and opted for the $2,000 rebate, the monthly payment would be $407.16 and total cost of $14,879.40 over 36 months.  Hence the buyer, by financing through the credit union and taking the rebate, would have a total savings of $1,120.60 over the zero percent financing.