The phrase, “If it’s too good to be true, it probably is too good to be true,” is something you should keep in mind while searching for a car loan. Often times you may see advertisements on TV where car salesmen advertise 0% financing and extremely low interest rates if you buy car from their dealership. Though not technically a lie, these are generally “teaser rates” meant to get you in the door of that dealership. In reality, once you are actually there these teaser rates may not apply to you or may not be the best deal.
Most of the time, a consumer must have a perfect credit score to qualify for 0% financing. That means only about 5% of the population qualifies for a 0% interest rate. Someone who does qualify for 0% financing will most likely have larger payments over a shorter period of time, which may be hard to work into a monthly financial plan if you are on a budget. Those people who qualify will also most likely have to choose from a very limited number of car models, and may have to give up the right for a manufacturer’s return if they decide to take the deal. On top of all that, car dealers often compensate for the lost profit, by raising the total price of the vehicle.
Overall, it does tend to be too good to be true. If you do qualify for 0% financing make sure to read the fine print before signing away on a deal, or you may end up paying more for a car than it’s actually worth. If you’re part of the 95% of the population that doesn’t qualify, quality websites like NationalCarAndLoan.com can help you to get a fair auto loan with competitive rates and fair interest rates, even if you have poor credit.