0% Auto Financing Is An Effective New Car Marketing Tool
One of the strongest marketing tools used in new car sales today is 0% auto financing. Consumers have learned correctly that a major part of the cost of a car purchase is the financing cost. In a typical new car costing $20,000 to $30,000, a 0 percentage car loan can equate to a savings of thousands of dollars over the life of the loan as well as have a noticeable impact on the amount of money paid out monthly. It is not surprising that 0 percent car financing has been increasingly used to drive sales when new models are introduced, at year end to clear out inventories and during a period when there’s a slump in sales.
As one may expect, zero percent auto financing is generally only available to those with good and excellent credit. This is understandable since both the dealer and the manufacturer are foregoing a significant amount of their total profit when this is offered. Those with poor and bad credit find they rarely qualify and when trying to buy the same cars are faced with traditional interest rates.
In new car sales, 0 percent car financing is underwritten by the manufacturers and their captive financing organizations. For them it is another way of offering a discount. Since manufacturers aren’t in the used car market, one see’s zero percent autos financing much less often. When it is used, it generally works very differently than in the new car market. Generally the cars that carry 0 car finance are “marked up” by an amount close to the interest that would have been earned. Again, those accustomed to bad credit car loans seldom qualify even for these cars.
Those who generally find they are recipients of bad credit car loans should always focus on the fundamental basics of getting the lowest interest rate available for their credit circumstances. These include:
1. Make a small down payment if there’s any way you can.
2. Don’t be afraid to get a credit worthy co-signer
3. Buy a car you can afford not one you wish you could afford
4. Most dealers have cars they will make a real deal on to sell. See if one of these fits your needs
5. Always be aware of your credit score and as it improves, know you qualify for a lower rate