Should I take the zero-percent financing that dealers offer?

When it comes to zero-percent financing, is zero really your hero? While you may be eager to accept this popular offer from dealers, there are many factors to consider before driving off with a zero-percent auto loan.

What is zero-percent financing?

The financer is lending money to the buyer without charging any interest over the life of the loan. It’s common for dealerships to offer incentives like zero-percent financing or a rebate, especially for slower-selling models, or to make room for newer models.

Which offer should I choose: zero percent or a rebate?

Combining a shorter term, like 36 months, a low-interest rate, and a rebate can potentially fuel your savings more than a zero-percent offer.

New Auto Loan: $30,000

Term	36-months	60-months
Sales Price	$30,000	$30,000
Rebate	$-2,500	$0.00
Net Price of Car	$27,500	$30,000

Interest (%)	1.90%	0%
Interest ($)	$900	$0

Loan Amount + Interest Repaid	$28,400	$30,000

Savings	$1,600	$0

Before you head over to your nearest car dealership or check out their online inventory, get a precise picture of which option could save you the most money with our Rate vs. Rebate Calculator. Another recommendation? Make sure you’ve determined how much you want to contribute for a down payment, and start building a savings plan to decrease the amount you finance.

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