Many auto companies, including Fiat Chrysler, General Motors and Hyundai, offer 84-month auto loans at 0% interest. Seven years without any interest. Other banks are offering zero interest for 72 months. Not only that, buyers can defer payment for 120 days, or four months. This should help workers on leave. Auto deals and loans are taking up more space in finance.
With a long loan and no interest, monthly car loans can be very low. That is, of course, if your credit score is good enough to qualify. But don’t get so focused on that very attractive rate that you forget to consider all your options, experts warn. This may not be the best deal for you. People should find best car deals.
There are risks associated with buying these long-term auto loans. The main point: Even after the smell of your new car has faded into a forest of pine cardboard air fresheners, you’ll still be paying for it for a long time. By then, you may not like the car as much, even if you loved it when you bought it. In the meantime, your needs may change, says Michelle Krebs, an industry analyst with AutoTrader. A lot can happen in seven years.
Until then, you’ll probably need a bigger car, or even an SUV or minivan. Moreover, new cars with fancy new technology may start to look attractive a few years down the line. Maybe you want to use an electric car sometime before 2027.There’s also a basic math problem. The longer your loan term, the longer you’ll be “underwater” in your new car. That means you’ll owe more than the car is worth. All new cars lose value the moment you buy them. The initial decline in value is steepest — after the change from a new car to a used one — and then declines each year until it gradually declines.
The amount you owe on your car, on the other hand, goes down at the same rate every month. The slope will get smaller as the loan lasts longer and the payments fall. This adds up to the time when you owe more than your car is worth.
Jessica Caldwell, an analyst at Edmunds.com, said: “In terms of ‘Oh my God, I bought this car and it’s not even worth as much as my loan’, the deal is a bit negative.” . “It’s not a good feeling.”
If you are happy with your car or crossover and plan to continue driving it, this is not the real problem. This is only a problem if you need to change or if you just want a different car. Instead of having a deal that will help you pay for the new car, you’ll be dealing in a rolling pile of debt.
Any car dealer will be happy to wrap up the rest of the money into your new car loan. Of course, this will make your next round of new car payments even bigger.
Keep in mind that 0% interest may not be the best offer you can get. Some carmakers are also offering cash rebates in lieu of interest-free loans. In many cases, rebates can result in lower monthly payments when paired with low-interest loans.
If your credit score is good enough to qualify for a zero-interest loan, it’s almost certainly good enough to qualify for other low-interest loans.
Before you start shopping, check what interest rates you can get for auto loans from your bank or credit union. This may even be less than the 0% bonus the dealer can offer in addition to making a lower payment when combined with a rebate. If you want to find a platform of best car deals, try to find YesAuto UK.