Are 0% APR car loans too good to be true?


As the economy strengthens and dealerships start making way for new models, many are offering an eye-catching financing deal: 0% APR. Before the prospect of paying no interest gets you signing on the dotted line and driving off the lot, consider these 4 tips.

1. Zero-percent may only be offered on loans with short terms. That means you’ll likely have high monthly payments so you can pay off the loan in time. Depending on how strong your cash-flow is and how comfortable you are paying high monthly car payments, the 0% rate may come at a steep price.

2. To get the 0% APR, you may have to forego rebates. Especially around this time, when dealers start trying to get rid of inventory in preparation for newer models, rebates offered can be especially rewarding. If you have to pick between a 0% APR and a generous rebate, do the math first. The rebate could end up saving you more than what you would save on interest payments.

3. Don’t forget about the price of the actual car! Don’t get so swept up with the 0% rate that you forget to consider the price of the car—0% may only be available for certain models, and those models may be way out of your price range. Remember your budget and negotiate on price before discussing rates.

4. Only those with really good credit typically qualify. Even if a 0% APR is widely advertised, that special rate may only apply to those with excellent credit. So check your credit before you get into serious negotiations. With TransUnion Credit Monitoring, you can even check your TransUnion credit report and score on your phone when you’re at the dealership.

If 0% APR car loans work for you, then they aren’t too good to be true. Dealerships are always competing for those with good credit, but make sure you check yours first and do the math.

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What You Need to Know:

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