We’ve all been seeing the car company ads for 0% financing and great discounts on new vehicles. In this blog, we break down what that means, and whether it is, in fact, a good deal.
Most of what we’ve seen for these ads is one or the other – meaning you can get either the low to 0% APR, or get rebates/discounts on a new vehicle. Yes, new vehicles – most of the incentives are for new vehicles only. Additionally, the 0% financing is likely only available to the highest qualified buyers (A+ credit).
So how can you tell what’s best for you?
First, give us a call! See how we can help you with financing. Let us know your approximate budget and preferred term or payment, and we can let you know whether you would be approved and at what rate. When you go into the dealership, you will now be armed to negotiate a ‘cash price’ for your new vehicle.
We can also help you determine which is the better deal. While the low-rate financing may look good, oftentimes the discounts that you get in lieu of the low-rate end up being the better deal – even with a slightly higher APR.
For example, say you qualify for a dealers low-rate – an example being 1.9% APR for 60 months. But when you take that dealer financing, you cannot take the rebates/discounts. So you finance $20,000 for 60 months at 1.9%. That sounds great!
But….
You talk to the team at Saco Valley Credit Union. Your CU tells you that they can do 3.29% APR for 60 months.* While that seems higher on the surface (but still a great, low rate), let’s do the math:
Example – Actual terms may vary.
Dealer Financing:
Cost of the loan for 60 months at 1.9% APR = $20,980.86*
Rebates: $0
Total Cost of the vehicle: $20,980.86
CU Financing:
Cost of the loan for 60 months at 3.29% APR = 21,717.42*
Dealer Rebates: $1,500
Total Cost of the Vehicle: $20,217.42
Savings from financing at the Credit Union in this example: $763.44*
So while it appears by rate alone that the dealer financing is the better deal, when you actually do the math and look at the offers, it may not be. Other times, it may be a great deal. Remember, most of the offers we see are for new cars only. Sometimes you can find a gently used car for even greater savings.
The best thing you can do is to contact us today! We are happy to help you figure out your options – and make sure you get the loan that’s best for you. Additionally, for a limited time, finance your next vehicle with SVCU and make no payments for 60 days!**
*The Annual Percentage Rate (APR), term, costs, and math are for example purposes only. Example does not take into consideration possible taxes or doc fees. These numbers, rates, terms, etc. do not constitute and offer and may not be available. Loan subject to credit approval and membership eligibility. Please visit our rates page for actual rates and terms available. **Limited time offer. Subject to change at any time. Interest will continue to accrue during this time.