Beware of zero percent car loan financing

It is summer and car dealers in full force to sell you a car. One of the enticing aspect is many car dealers as well as brands are offering zero percent financing. Before you sign on the dotted line for one of those loans consider these common features of zero percent car loans.

  • Many come with shorter terms of 24 to 36 months instead of more common 60 month loans.
  • Not everyone can qualify for zero interest loans. They may be available only to those with higher FICO scores.
  • Look for hidden pre-payment penalties and application and other fees.
  • The deal may be only applicable to certain model cars not the one you are interested in or the color you want. Do not get pushed by the dealer to buy a different car than what you are interested in.
  • If the dealer offers cash rebate, compare the zero percent financing to cash rebate. You may find that rebate is better with your total cost at the end of the term being lower than the zero percent interest loans.
  • Shop around. There may be better deal with other auto financing opportunities compared to your dealer financing. This works better for those who are with lower FICO scores.

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