Everyone's Offering 0% - Is It Time to Buy?

ith automobile finance rates changing almost weekly, how do you know if this is a good time to buy a car? If you have a good credit rating, many companies are now offering financing rates as low as 0%. With financing rates this low, how can you afford not to get in on this type of deal?

If you have perfect credit, you are almost guaranteed a financing rate of 0%; however, it’s always a good idea to check the ads in the newspaper before you do anything. Check the ads on the car dealers that interest you, and/or the ones offering the best finance rates.. Pay attention to their advertisement on the TV or radio – sometimes you can pick up on a sale advertised on the TV or radio which was not mentioned in the newspaper ad. Even if the prices these ads give you are not real, they can still give you a starting point.

Before you visit the dealership, be prepared. If you have a car model in mind, call your insurance company and ask about rates. You’d be surprised at the difference in insurance rates from one vehicle to the other, even if both models are from the same year. The same applies to insurance companies. This might be a good time to shop around for an insurance company and compare rates.

It’s a good idea to know your credit score before visiting the dealer. You can get this information by contacting the credit bureaus and requesting a copy of your credit report. This will also provide you with the opportunity to review your credit report and make sure all the information is correct and up to date. Many times a sales person or sales manager will offer you a higher APR than advertised because they claim your credit score is low. If you have a copy of your credit report with you, you can prove to them that your credit is good – just in case they decide to rearrange the number a bit! However, keep in mind that there’s still a good chance you will not be offered a 0% APR if your credit score is below 750.

Other important factors to keep in mind:

· The 0% APR rates for car loans are occasionally only on 12 to 36 month loans. If your loan is for 48 or 60 months, you may not get 0% financing. The monthly payments on a 12-month loan are typically much higher than what most us can afford; therefore, it is reasonable to say that only a very small portion of the car-buying population would be able to secure and live within this type of loan.

· Many dealerships offer a low APR along with a rebate. Keep in mind that you can’t get both - you either get the low APR or the rebate. Sit down with the finance representative and calculate which would be more beneficial to you. If the dealer is offering a big rebate, you might consider taking the rebate over the low APR. Before making your final decision, consider visiting E-LOAN on the web. E-LOAN offers an online calculator that will help you decide which option to choose based on your circumstance. Before you use their calculator, you will need to know the rate being offered to you, the purchase price, your down payment, the term length, and the federal and state tax rate.

Finally, is this the time to buy a new vehicle? Yes, if you have perfect credit, can afford to pay off the loan in 12 months and don't have a large rebate coming from the manufacturer. If not, take the time to review and understand the numbers completely before signing your name on any contract!

Also see:

Financial Automotive Articles

New Car Buying Worksheet Use this worksheet to help yourself sort though all the data.

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