Many car manufacturers are now offering 0% financing and the offer seems almost too good to be true. While 0% financing may sound attractive, be careful before choosing this option. Let's take a look at some facts.

1. 0% Financing is usually only for qualified buyers, with very high credit scores, and for a short term, usually 36 months. What does this mean? If you do qualify, your payment for a $20,000 loan (normally around $400 per month) will be about $556 per month! If you do not qualify, you will be offered a higher rate, maybe 4.9%, and by accepting this rate, you will be giving up a substantial rebate!
2. In almost every instance that special financing is offered through a dealer, the buyer usually has to choose between the low finance rate and a considerable rebate. When you choose the rebate, that amount is immediately subtracted from your selling price. When you choose the low finance rate, the amount of the rebate is used to "buy down" the interest rate. So if do not take your loan to term (make ALL of the payments), you have not taken full advantage of the savings. The only exception would be if ALL of the following conditions apply to you: An exceptional credit score, excess cash flow to make the higher monthly payment, and you must keep this particular vehicle AT LEAST 36 months. If it is traded, stolen or totaled, you have wasted the savings.

It is almost always better to take the CASH REBATE than to take the low interest rate offer. The full savings are immediate; no risk, no wait!