A zero percent interest loan is a great way to save thousands of dollars on your next vehicle purchase. However, you must make sure you read the fine print to make sure you aren’t wasting your money.
While a 0% interest loan sounds like a fantastic deal, the actual cost of the loan may be significantly higher. The interest rate is usually based on your credit score. If your score is less than 700, you might have a hard time qualifying for a 0% interest offer.
Zero-percent loans are usually offered to buyers with good or excellent credit. Some lenders also offer a deferred interest clause that will let you delay interest charges for a specified period of time. But this doesn’t help if you don’t pay the bill. In fact, a delayed payment can cause you to owe even more in retroactive interest fees.
Besides a low interest rate, the main attraction of a 0% APR loan is the ability to buy a new or used vehicle for no money down. You might be surprised to find that automakers will often raise the price of the car to offset the financing charge. Another reason you might want to consider this type of loan is that you can pay off the loan early. This can mean hundreds of extra bucks to spend on other things.
Most zero-percent offers are offered over a short period of time, typically 24 to 36 months. However, some manufacturers have begun offering zero-percent interest financing on vehicles for as long as 70 months. Taking advantage of these longer terms can be an ideal way to purchase a vehicle that meets your financial goals.
Compared to traditional interest-based loans, a zero-percent loan is the cheapest way to purchase a new or used car. Getting pre-approved is a good idea. Once you’ve been approved for a loan, you will have a clearer picture of how much you can afford. By using this figure, you can begin planning your budget.
Since zero-percent interest loans require a payment, you’ll be in a good position to keep your finances under control. Having a monthly budget that you can follow will reduce stress and increase your overall well-being. Keeping a check on your credit report will ensure that you have a positive score.
Although a 0% interest loan might sound appealing up front, you’ll be in for a rude awakening if you can’t repay it. This can be especially true for those with high debt levels or a poor credit history. Not only can this leave you with a bad score, it could also cause you to miss important payments. That’s a big problem in this day and age.
The most important thing to remember is that no-interest auto loans aren’t for everyone. They’re usually available to people with strong credit and a stable income. If you’re on a tight budget and don’t have the cash on hand, you should definitely shop around for a better deal.