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The "Inside Scoop" on Financing Deals

Auto dealers and carmakers offer all sorts of special deals that seem to be very attractive. Whether it’s a $3,000 rebate, zero-percent financing, or some other kind of incentive, the deals make the car of your dreams seem like a great buy. But do those incentives always give you the best deal?

Rebates. A rebate (or “cash back”) is a special discount offered by car manufacturers to help their dealers make sales. While it sounds like you’ll get a big check after the purchase, most rebates are actually applied to the purchase price of the car. In some cases, dealers may allow a buyer to use the rebate as a down payment. Less-scrupulous dealers may advertise very low prices for their cars, but when you read the fine print, you’ll see that the rebate has already been applied. Some dealers may not tell you about rebates (or may quote a lower number), so it’s a good idea to research current rebate offers before you set foot in the showroom.

Zero-percent financing. Sounds too good to be true, doesn’t it? A loan with no interest? But it’s important to remember that a deal that sounds too good to be true nearly always is. While the rate may be genuine, the offer may be very limited. For example, you may have to agree to an unusually short loan term, such as 24 or 30 months, with a higher monthly payment than you were expecting. Or, the special may only be offered on certain vehicles that are on the dealer’s lot (usually ones with a lot of expensive options). If you had your heart set on another model or a basic vehicle, you may be out of luck. In other cases, you may be required to pay the full sticker price to qualify for the “cheaper” financing.

What to do? Your best bet is to take your time. Never rush into a deal or give in to pressure from the salesperson – a legitimate offer usually doesn’t require an immediate answer. Use the online auto loan calculators to compare the different ways to finance, and see which one gives you the most for your money. And when you compare prices between dealerships, be sure you’re comparing apples to apples. Break out the vehicle cost and any incentive, and then calculate the true cost of your purchase. You may discover that what looks like a great deal is anything but that.


Posted: 8/29/2014 with 0 comments

Categories: Auto Loans, Buying a Car, Finances



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