0% FINANCING vs MANUFACTURERS REBATES...
WHICH SAVES YOU THE MOST MONEY?
Auto manufacturers began offering
0% financing back in 2001 after September 11th when the bottom fell
out of the car buying industry. It took
consumers by storm. As with any advertising
campaign, the plan was to get people into the dealerships. It was felt that if the dealers could get the
people back into the dealerships that they could sell them a car. The problem with this campaign is that the
consumer became so fixated in the fact that they were getting a 0% loan, they
were not focusing on the fact that they were paying full price for their new
vehicle. It has been quite some time
since I did a comparison of what would happen if a member were to take the 0%
financing and pay full price for the new vehicle, as opposed to taking all the
rebates from the dealer and the manufacturer, and finance the purchase at the
Credit Union. Since there is a big push
again for 0% financing, I thought it would be a good time to show you which is
a better deal...you may be surprised!
We recently had a member come to
us and say that they could either take all the dealer rebates, $4,500, and get
their own financing or they could take the dealers financing of 0% and finance
the full $20,000. We did a cost
comparison for the member and it is broken down as follows:
60 mos. @ 5.50% 60 mos. @ 0%
Sales Price $ 20,000 $ 20,000
Rebates ( 4,500) -0-
Amount Financed $ 15,500 $ 20,000
Monthly Payment $ 296.07 $ 333.33
As you can see your monthly
payment is actually more if you financed the full price at 0% financing. You could save $2,235.60 over the life of the
loan if you actually went to Gulf States Credit Union and financed your purchase
and took advantage of the dealer rebates.
This is assuming that your credit score is at least 720. This is the rate that you can get at the
Credit Union. The rate to qualify for
the 0% could be as high as 760. There
are not many people that have 760 credit scores.
The main point that I am trying
to make is that you need to look at the entire picture before you buy your next
new vehicle and not get caught up in a few words or numbers. It could end up costing you $2,235 if you make
the wrong choice. Since every situation
is different, why not make a simple phone call to us and let us work up the
numbers for you.
