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Suddenly we are all overwhelmed with major car manufacturers advertising for financing as low as zero percent on new cars. These
incentives have proven to be extremely popular, stimulating customers to flock to showrooms around the country to kick the tires and take a test drive. In rare cases, these low interest loans may save you money, but you
need to understand how they work before you sign.
For instance, most zero percent loans are for 36 (or less) months, although the typical loan is for 60 months.
This means that your monthly payment will be more than you might be accustomed to. If your credit report is not perfect, zero percent interest jumps drastically higher to nine or ten percent.
In addition, the popularity of these programs has led to an overrun of used cars on dealers’ lots, making it harder for you to get top dollar for your trade in.
If you end up paying a lower interest rate, but taking out a bigger loan, your total expenditures may actually go up, therefore, costing you more in the long run.
If you are considering buying a new car, your best strategy is to visit us at the credit union to learn more about your financing options. This way, you’ll be sure to get the best deal from the dealer.
We offer information on the cost of the new vehicle, and many dealers will give you an even better deal if the vehicle is paid for in “cash” (i.e. with a car loan from your credit union). And if you already have a car loan from another institution, check with us to find out if we can lower your payments through refinancing.
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