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Hard Facts About 0% Financing

Zero percent financing is becoming more and more common in the auto industry and for other major purchases like furniture and appliances. It may seem like a great deal but when you consider other factors, 0% financing may not be your best option. These offers are often used to “bait and switch” customers since it can be very hard to qualify for the rate. A large down payment may be required as well.  Once the dealership or retail business is able to get you into their finance department they may try to pressure you into a higher rate.  

Compare Your Options

Taking the 0% financing will typically require you to forfeit the rebate money and/or your ability to negotiate a better price.  The rebates and/or discounted pricing could save you hundreds, even thousands of dollars over the term of the loan as shown in this example of 0% APR1 from an auto dealership compared to St. Paul Federal Credit Union’s best rate on a new vehicle with the rebate.

 St. Paul Federal Credit UnionAuto Dealership
Price $18,995.00 $18,995.00
Dealer Rebate $3,000.00 $0.00
Finance Amount $15,995.00 $18,995.00
Payment $287.34 $316.58
Finance Charge $1,245.49 $0.00
Sales Tax $1,040.00 $1,235.00
Total Cost $18,280.49 $20,230.00
Total Savings $1,949.51  

This is just one example of the possible savings when choosing the rebate and/or discounted price over seller financing.  Stop in and talk with a Member Service Representative and compare your options.  We’ll find out what the best route, whether it is taking the 0% or taking the rebate and/or negotiating for a better price, and help to get you the best possible deal on your new car or other major purchase. 

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1APR = Annual Percentage Rate.  Calculations are for example purposes only.  Calculations are based off exceptional credit history, your rate may differ.  
2Total Cost includes: MSRP less rebate, tax, down Payment, & finance charges.

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