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If you are looking for a new car, you already know that financing offers differ significantly from one manufacturer to another. But you also know that it is possible to obtain favorable interest rates, especially at this time of year.
An interest rate that seems to keep coming back is that the famous 0%. The period over which the loan ranges may be up to 72 months or even more, but no matter, it seems at first glance that it is possible to pay a new car for several months without adding to the amount a sum for any interest. But is it realistic and above all, is it “a true 0%”?
According to a sales representative at Kingston Toyota Scion, the confusion begins when there is an amount given for cash purchases. “The 0% interest rate is real. This is not a strategy used by the manufacturer to attract consumers and then have them secretly pay interest or whatnot. However, it is sometimes possible that the total value of the car is different if one pays cash compared to financing the purchase. ”
Often, there are two options available to consumers. You can buy the car by financing at 0% interest, or you can opt to pay for the car in cash and get a discount on the amount charged for the model.
For example, imagine a car that sells for $ 25,000. To simplify the example, put aside all taxes and other related costs. Imagine then that the manufacturer offers a rebate of $ 3,000 if you pay cash or an interest rate of 0% when financing on 60 months. If one opts for financing, they will pay $ 416 and pennies a month. If you opt for the cash payment, then you pay $ 22,000 for the car.
So it is true that in this case, financing means that you are paying the full 25 000$ instead of 22 000$. However, if we do not have that $ 22,000 in the bank, then we cannot take the cash payment option. In addition, a financial planner will be able to see if it is more advantageous to keep that $ 22,000 in a savings account so that it can generate interest in a case where the financing of the car would be without interest.
In short, there are several factors to consider before choosing the financing or the cash payment option and a financial adviser will be able to enlighten you. But what is certain is that it is impossible to find interest-free loans for amounts that are so important outside the automotive industry. Sometimes it can be a good option to enjoy them when buying a new car.
