Last month, my son’s girlfriend bought a car at a local dealership. She was putting $2,000 down on the car and had the option to take the 0% financing or a $1,500 cash-back rebate. Not being sure which she should do, the dealer “ran the numbers” for her and told her it would be a better deal to take the 0% financing. Of course, what he didn’t tell her was he used a car loan rate that was on the very highest end of the financing spectrum to compare. That seriously skewed the numbers.
So, let’s run the real numbers. Her car cost $16,500 and was a new 2011 model. After the $2,000 she put down, she was financing $14,500. She wanted to finance it for 60 months to keep her payments as low as possible.
Total paid on loan: $14,500
Savings by using the Credit Union: $397.60 over the life of the loan!
Her savings would have been even greater if she could have lowered her rate by financing for a shorter term (Destinations is offering rates as low as 2.99% APR).
Another surprise was in store for her when she tried to go back and change the financing, taking the rebate. She thought she had 3 days in which to change her mind. The dealer would not change the deal for her. Turns out that in Maryland, there is no 3 day right of recission on auto purchases.
One thought on “When is 3.25% Lower Than 0%?”
Yes you are right dear, sometime interest rate 3.25% Lower Than 0%. Thanks for sharing such information with us.
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