When it comes to auto loans, a 0% interest rate is a head turner. But it’s not always the best
Car dealerships generally advertise 0% offers in the summer when they’re looking to make
room in the showroom for newer models. The offers come from the financing arms of the
large auto manufacturers, who, unlike traditional lenders, profit directly off the sale of the
car and don’t necessarily need the interest revenue.
But like any great deal—there’s a catch. The New York Times reports that only about 10%
of consumers actually qualify for 0% interest loans, which require pristine credit—usually
a FICO score of 720 or higher. And the loans typically are reserved for a limited number of
models and are not available if you’re shopping for a used car, which obviously tend to cost
less than newer models.
These 0% loans often are paired with shorter-term loans, which cost you less overall but
mean a higher monthly payment.
Before you head to the dealership, keep these points in mind:
Look at All Available Deals
Check for other offers, such as cash back. If you can get a rebate—which lowers the overall
price of the car—paired with a low-interest loan, it may save you more than the 0%
financing. So be sure to crunch the numbers. You can find a number of online calculators to
Price Auto Products
Many times the products added to your auto loan at the dealership are more expensive
than at a credit union. For instance, at Resource One, you could save up to $2,400 by adding
our Vehicle Service Contract and DentGuard® Ultra on your auto loan rather than getting
them at the dealership. As an added bonus, you now have the option of Unemployment
Payment Protection to give yourself peace of mind from the unexpected.
Get Preapproved for a Loan at your Credit Union
Heading to the dealership with a firm offer in hand will give you a point of comparison and
puts you in a stronger negotiating position.
Offer applies to consumer loans only; commercial vehicles and commercial loans do not qualify. Payment example: Estimated monthly payment of
$19.24 per $1,000 borrowed at 5.80% APR for 60 months. Savings calculated by comparing back-end auto products with the average price of dealers
offering the same or similar products. All loans subject to approval. Restrictions may apply; see credit union for details.