The Truth About Zero-Percent Financing!
By Tony Iorio

It can be a dream come true for people with excellent credit.  But for many car shoppers, zero-percent financing is simply not feasible.

Statistics from CNW Research show that only about one-third of buyers who apply for zero-percent financing actually qualify.*  And among those, only around 10 percent actually close the deal, according to the National Automobile Dealers Association.**

Why so few?  Because of drawbacks like these:

• Shorter loan terms.  Some dealers offer 60-month terms, but 36 months is more typical--which means higher monthly payments.
  
  
• Fewer models to choose from.  The customer may be limited to what's in stock, and therefore, not able to buy the vehicle they truly want.
  
  
• No rebate.  The customer may be asked to choose either zero-percent financing or a cash rebate.

Can a customer do better than zero-percent financing?

Sure!

By financing with a low rate from Capitol One Auto Finance and taking a dealer's cash rebate (if available), a customer could really save big:

  36-Month New Car Loan Comparison

Annual Percentage Rate	0%	3.99%
Cost of Car	$20,000	$20,000
Less Equity in Trade	$4,000	$4,000
Less Rebate	$0	$2,000
Amount to Finance	$16,000	$14,000
Monthly Payment	$444.44	$413.27
Total Cost	$16,000	$14,877.85
SAVINGS	$0	$1,122.15

Plus, with a blank check a customer gains a strong negotiating advantage. (Many customers lured by zero-percent financing get so distracted by the offer that they forget to negotiate the price of the car.) With a blank check a customer doesn't have to worry about financing and can concentrate on negotiating the lowest price.

*Source: Consumer Reports online; November 2002.
**Source: NADA Chief Economist; November 2002.