| Be A
Smart Consumer
The 0% financing sounds
terrific! So naturally you wonder, "What’s the
catch?"
Of course, there's a catch
— several, actually. You won't find the information
below in the dealers' newspaper ads, but we're not shy about
telling you.
Only 9% Of Car Buyers
Actually Qualify
For 0% Financing
The
tiny print says "Not everyone will qualify." The
truth is, hardly anyone qualifies. Need proof? A recent
survey showed that your chances of getting a 0% APR loan
are just 1 in 11*.
Qualification
for 0% APR financing is usually based on your FICO score,
which includes many variables, such as the number of credit
cards you have, the balances you carry, how long you’ve
had them, and even the current phase of the moon.
Okay,
we're not serious about that last one… but the truth
is, FICO scores are difficult to figure, and if you're one
of the 10 out of 11 who gets turned down, you won't even
know exactly why. The bottom line? 0% financing is not for
everybody.
*CNW
Marketing, Bandon, Oregon, 2002.
You Pay More For The
Car
You
can take the "super-low" dealer financing, or
you can pay less for the car by taking the rebate —
but you can't have both.
As
the chart below illustrates, it's much better to take the
rebate.
In
this case, we're talking about a car with a list price of
$18,500. You're financing 100%. Here's how the numbers crunch:
| |
Dealer financing |
GCEFCU
financing |
| Sticker
price |
$18,500 |
$18,500 |
| Rebate |
$0
|
<$2,000> |
| Loan
balance |
$18,500 |
$16,500 |
| APR |
0% |
4.25% |
| Term |
3
years |
3
years |
| Monthly
payment |
$514 |
$488 |
Figures
are for comparison only; your actual figures may vary. GCEFCU
Annual Percentage Rate effective 3/20/06, subject to change,
and includes a 0.5% discount for direct deposit to a GCEFCU
checking
account and automatic transfer of payments. Your rate may
vary based
on your credit score and credit history.
Taking
the dealer financing costs you an extra $26 per month! Another
way you'll pay for getting a "super-low" rate.
Most of the time, those rates come with really short terms,
like 24 or 36 months. That results in uncomfortably high
monthly payments. And when you're trying to fit a car loan
into your household budget, it's all about the monthly payment.
How
much of a difference does the term make? Say you're buying
a new car for $24,500. If you go for dealer financing and
accept a 24 or 36 month term, you better be ready to pay
through the nose each month!
2
years: $1,021
3 years: $681
"Super-Low"
Financing Isn't Available On All Models
If a model is popular, dealers don't need gimmicks to sell
it. So the incentives and deals are typically available
only on the models nobody wants.
It
comes down to this —
who has your best interests in mind? The car dealer? Or
your credit union? See us when you're tempted by dealer
financing. We'll show you that it's not the bargain it appears
to be.
|
