Vantage Point

Zero in on 0% Financing

There are a handful of options when it comes to financing a vehicle, and it’s important to know the difference to select the best one for you. While a 0% loan is often advertised as one of the best deals you can get when you’re buying a vehicle, you owe it to yourself to examine the terms, payment and interest rate of all offers before making a final decision.

While yes, it’s possible to pay 0% interest on a vehicle loan, that doesn’t necessarily mean it’s the best option. It’s important to think not just about the interest rate, but also the terms and total cost. Provided you can find and qualify for a 0% vehicle loan, is it really the best deal for you? Are there any catches? And if you were planning on paying cash for your car, is it even worth considering?

The truth is, 0% financing through a dealer could actually be more expensive than a loan obtained through Vantage. For example, consider this scenario. Let’s assume you’re paying $20,000 for a car. You’re presented with two options on a five-year loan—0% financing from a dealership or a 4% interest rate that also comes with a $3,000 rebate from the manufacturer.

If you take the 0% financing option, your monthly payment will be about $333. At a 4% interest rate with the rebate, your monthly payment will be about $313, saving you a little more than $1,200 over the life of the loan.

The best solution depends on the price tag, the size of the rebate and the interest rates available for financing. Our rebate vs low-interest calculator can help you determine the best option for you based on your individual situation. If you’re wondering how a payment may fit in your budget, our financial coaches are here to review your income and expenses and find ways to help you reduce debts in order to better afford a vehicle.

If you’re considering a purchase or refinance, your first call should be to Vantage. We can answer any questions you might have about vehicle loans, as well as any other additional options available for financing.

Purchasing a vehicle is one situation where “knowledge is power” really is true. Take the time to educate yourself about your financing options, and your wallet may thank you for it.

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