0 % financing - is it real?

[Juddog]

I see some auto sales companies advertising 0 % financing "for those who qualify".

What is the catch, do you have to have super credit to qualify?

 

[Horsepower]

In most cases you need a score of 680 or above to qualify. In many cases the 0% is one option and a rebate is another. If you are financing, run the numbers both ways to see least total cost.

 

[Juddog]

Originally posted by: Horsepower
In most cases you need a score of 680 or above to qualify. In many cases the 0% is one option and a rebate is another. If you are financing, run the numbers both ways to see least total cost.

Is there a way to get your credit score for free? I had a bankruptcy 8 1/2 years ago, so it still shows on one of the three credit reporting agencies.

 

[Juddog]

Saw a deal on myfico (25 % off using code MW01), so grabbed it.

My credit scores are:
TransUnion: 711
Equifax: 696
Experian: 703

Do you think that's good enough to get a decent financing deal?

 

[ajayjuneja]

Yeah, that should be good enough to get a good financing deal.

 

[KentState]

Recently, when I got my CTS, the definition of good credit was 630 and above to qualify for the special financing. When I purchased the Scion Tc 4 years ago, the best financing was for people 675 and above.

 

[Demon-Xanth]

I got 0% when I got my Dakota in '01. It took a score of 650 and 5 years on the job. We rounded up the job numbers at the time and my score was something like 680 then. (it was 800 when I got my mortgage a few months ago) But when I got it, it was only a 36 month, not longer.

 

[radioouman]

When I bought our Saturn in 2002, I got 0% and I have no idea what the qualifications were, but I had just moved to a new city, and had only been working for 1 month at this new job at the time. (Recent college grad.) They didn't seem to be real happy about 0% until I offered to put $1500 down on it when we bought it. No problems after that.

 

[senseamp]

It's basically a discount, they just give it to you over time by forgoing the interest.

 

[Juddog]

Cool, thank you everybody for the answers. I was thinking that my ~700'ish credit score was too low to get into the 0 % / 1.9 % APR financing, but now I have hope.

I have basically spent around $6000 keeping my car running this past year and a half, between a broken radiator, transmission going bad (which was $3k right there), and numerous other crap all failing I basically did the calculations and realized I was paying more to keep my car running than I would pay for a brand new car. Not to mention the bluebook value is $2500.

 

[kalrith]

Originally posted by: senseamp
It's basically a discount, they just give it to you over time by forgoing the interest.

Yep. A lot of times the promotion will be something like 0% financing OR $1,000 cash back. Sometimes the financing is for a really short period as well. For example, 0% financing on an STI is for a two-year loan IIRC.

 

[radioouman]

Originally posted by: senseamp
It's basically a discount, they just give it to you over time by forgoing the interest.

Yep, I agree. Except when I bought our Saturn almost 6 years ago, it was the same no-haggle price with or without 0% financing. Now, 0% is more of a gimmick.

 

[Pariah]

Originally posted by: senseamp
It's basically a discount, they just give it to you over time by forgoing the interest.

No, it isn't. Eliminating loan interest does not discount the vehicle, it prevents you from paying money to the bank on top of the price of the car for lending you the money for it. If you can pay cash down for your vehicle, taking the 0% financing isn't going to save you any money (though it could actually make you money). That said, you're almost always better off taking the 0% if it's 48 months or longer, than you would be taking whatever instant rebates or other discounts are available.

Take a typical 60 month loan for example. If the loan amount was $30k and there was a $1000 cash back offer and you got a pretty decent 5.5% rate on your loan, you'd be paying $553.93 per month on your $29k loan. If instead you chose no cash back, and 0%, your monthly payment would be only $500 on a $30k loan. That's a significant savings of $3235.80 over the life of the loan. That's no gimmick in my book.

And truth be told, you should never put anything down if you get 0%, even if you can afford to pay for the car in cash. Instead, take whatever downpayment you have and stick it in an interest bearing account, and you basically end up making money off of someone else's money. About the only downside is that you will be upside on the car for a period of time.

I got 0% last year and they stacked the rebates on top so even if the offer says one or the other, it's not necessarily true. Do your homework beforehand, check your local credit unions or whatever to find out what kind of rate you can get through them before you go to the dealership. Run the numbers yourself, so you know what the best deal is depending on the scenario when you walk in the door.

 

[Vogel515]

Financing on all loans is becoming more difficult with the loan situation the way it is.

Last time I checked most lenders have changed their rating tiers for credit.

720 used to be considered Excellent, 680 good, 640 decent...

Now its more like 740 excellent, 700 good, 660 decent...

 

[Juddog]

Originally posted by: Vogel515
Financing on all loans is becoming more difficult with the loan situation the way it is.

Last time I checked most lenders have changed their rating tiers for credit.

720 used to be considered Excellent, 680 good, 640 decent...

Now its more like 740 excellent, 700 good, 660 decent...

When I ran the FICO scores on myself it listed the scores as "good", right smack dab in the middle.

 

[Vogel515]

Sorry, I wasn't referring to the FICO rating you get but rather what the lenders see as being good.

It's one thing to check your score and have them tell you your score is fine when they aren't giving you any money, its another story when you go to the lenders with your score.

The lenders are getting so much heat over bad loans that they've significantly raised the bar in order to get financing. Fico might tell you your score is "good" but that means nothing if the Lender won't give you the financing unless you meet their criteria of what is "good" or "excellent"