Jan 3, 2015 Admin | January 3, 2015 Why is a 0% car loan really not a 0% car loan? When thinking about a car loan, what should be considered?
3 thoughts on “Jan 3, 2015”
A 0% car loan is not really a 0% loan because they are often fees hidden in the loan. When thinking about a car loan you need to look at the fees and read the small print. Even if a fee seems small it will add up over the lifetime of the loan. You should find out what the total you are going to pay for the car is and not just what your monthly payments are.
If they say a car loan is 0% more than likely the total price of the car has been raised to take in to consideration the lower interest rate. There may also be some fees associated with doing that loan that make up for the lower interest rate. The car dealer may be doing some other offers that you will not qualitfy if you chose this one. Make sure to always read the fine print and know exactly what your getting yourself in to whenever you buy a big ticket item. When you look at a car loan you need to think if you really need a loan or not. If the car costs to much for you to pay cash for then why are you getting that expensive of a car. If you need a car to get from point A to point B and you dont have $2,000 to buy any car at all you would likely need a loan. Do not just buy a car because you can afford the monthly payment on it, make sure as a total the car is right for you.
Nice job, gentlemen. Let’s review.
0% loans are pushed to entice you to buy a new car or truck. First, that 0% only applies to people with excellent credit (760 FICO or higher should get you the best rates). Second, just as the Haag brothers mentioned, their are small fees that go with those loans. In many cases, you will pay $16 per $1,000 borrowed. Read the fine print!
Should a person consider a 0% loan? Sure, but don’t let them draw you into buying a vehicle you cannot afford just because you can cover the monthly payment. You also want to consider opportunity cost when making this decision. If you fork over $30,000, then that is $30,000 you don’t have working for you in your investment accounts. Think through the matter very carefully before buying a large item like a vehicle. There is a great deal at stake!