Good offer or bad deal? - Ask Your Advocate - car financing - Brief Article

Black Enterprise, March, 2002

Q

I've been seeing and hearing a lot about 0% financing. I've also noticed that it's not just cars even though that was my initial interest. I'm a skeptic and a firm believer that if it sounds too good to be true, it usually is. So what's the deal?

--R. Rutherford
Burbank, California

A

The deal is, the auto industry had to do something to save itself, and 0% financing worked--it energized the industry and got folks in the showroom. General Motors was the first to offer the incentive, and many others, even outside of the auto industry, have followed suit.

Is it a good deal? Well, that depends on what your credit standing is and what you can afford. To benefit from 0% financing, you have to have excellent credit. That's what the ads mean by "well qualified buyers". You also have to be able to pay off your loan in less time than you would normally. Most are not offering 0% beyond 36 months.

Also, understand that now, 0% financing may be applicable to only certain models. So, if you do qualify, make sure you understand the stipulations. In some instances, you might do better taking the rebate, applying it to your down payment, and then shopping around to find the best loan rate.

Don't get so excited by the incentives that you forget to negotiate the best price on the car, though. Check www.edmunds.com for the true market value of a vehicle.

--S.A.

Mail your finance questions to Ask Your Advocate, BLACK ENTERPRISE, 130 Fifth Ave., New York, NY 10011, or send an e-mail to alleynes@blackenterprise.com.