0% Car Financing

Zero percent financing on automobiles has become a very successful campaign for automobile dealers, so successful it has been copied in other markets 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. Generally speaking an applicant must have close to perfect credit to qualify. Many of the qualified overpay for their cars not bothering to negotiate the price. They mistakenly assume that they have already gotten the best deal available. Is 0% car financing the best auto loan rate? The 0% offer is usually accompanied by the “or $10 000 dollars cash back” clause. That $10 000 cash you lose by opting for the 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	$7055
* based on 48 months
* actual car found on the internet – 2005 mid size sedan

It is clear that the best auto loan rate is the 6.95% rate rather than the 0% car financing “deal”. Do your research before buying into these so called special deals.

A recommended method for securing the best auto loan rate would be to fill out an online car loan application. Simply click on Smart App Credit Application and you can fill out the application without any hassles. This process is for car buyers with good, bad or no credit history. Often times, more than one dealership or lending company will vie for your business allowing you to choose the best car loan rates for your budget. Without the issue of searching for financing you can spend your time researching the best car for you.