It can be a dream come true for people with excellent credit. But for many car shoppers, zero-percent financing is simply not feasible.
Statistics from CNW Research show that only about one-third of buyers who apply for zero-percent financing actually qualify.* And among those, only around 10 percent actually close the deal, according to the National Automobile Dealers Association.**
Why so few? Because of drawbacks like these:
- Shorter loan terms. Some dealers offer 60-month terms, but 36 months is more typical--which means higher monthly payments.
- Fewer models to choose from. The customer may be limited to what's in stock, and therefore, not able to buy the vehicle they truly want.
- No rebate. The customer may be asked to choose either zero-percent financing or a cash rebate.
Can a customer do better than zero-percent financing?
By financing with a low rate and taking a dealer's cash rebate (if available), a customer could really save big. Below is an example:
36-Month New Car Loan Comparison
|Annual Percentage Rate
|Cost of Car
|Less Equity in Trade
|Amount to Finance
Plus, a customer gains a strong negotiating advantage. (Many customers lured by zero-percent financing get so distracted by the offer that they forget to negotiate the price of the car.) With your own financing a customer doesn't have to worry about dealer financing, and can concentrate on negotiating the lowest price.