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Many auto dealers are offering 0.00% financing which sounds like a great deal but when you consider the factors, 0.00% financing may not be your best option. These offers are often used as a “teaser rate” to get you in the door. The problem with 0.00% financing is that not every potential car buyer qualifies for this super-low financing. The too-good-to-be-true rate applies to people with very high credit scores, excellent credit records and little or no debt. That means only about 5.00% of the population qualifies for the 0.00% rate.
You may be surprised to learn that even if you do qualify for 0.00% financing, it could cost you more in the long run. If the dealer offers you the choice of 0.00% or a cash rebate, taking the rebate and financing through HPCU could save you money—even if the rate is a little higher.
Some facts to think about before making the deal
- Generally buyers must forfeit the manufacturer’s rebate if they choose the 0.00% financing offer
- Buyers typically need to have a credit score above 700 to qualify for 0.00% financing offers
- 0.00% financing is usually reserved for select vehicle models
- 0.00% financing means you're essentially only paying for the car but add-on fees may be applied to recover the loss of interest
- Many 0.00% financing offers are restricted to shorter terms; this can cause your monthly payments to be much higher
- 0.00% financing offers are only available for new vehicle purchases
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So let's do the math
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Dealer Financing |
Houston Police Credit Union |
| Vehicle Purchase Price |
$40,000.00 |
$40,000.00 |
| Cash Rebate |
$0.00 |
$3,000.00 |
| Amount Financed |
$40,000.00 |
$37,000.00 |
| Interest Rate |
0.00% APR* |
1.99% APR* |
| Term of Loan |
60 months |
60 months |
| Monthly Payment |
$666.67 |
$648.39 |
| Total Interest† |
$0.00 |
$1,903.02
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| Total Payments† |
$40,000.00 |
$38,903.02
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| Total Savings† |
$0.00 |
$1,096.98
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At the end of the day, the most important thing when determining if you should go with 0.00% financing or credit union financing is what’s going to be best for you. Explore all your options before making a decision so that you leave the dealership happy and ready to enjoy your new car!
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