As auto dealers scramble to make up lost revenue amid the COVID-19 (or Coronavirus) pandemic, you’ve likely seen them heavily advertising 0% financing through the dealership and offering cash incentives and rebates. At first glance, many of us are tempted by these offers. However, if we take a closer look, these deals are not ideal for everyone. As part of our TORCH promise to our members, we want to Teach our members about the best options for their financial situation.

Let’s start with 0% financing. Financing with 0% interest isn’t easy to get since it requires excellent credit and, oftentimes, a large down payment. Before heading to the dealership or buying online, you should check your credit score. Our new online banking platform includes a tool called CreditSense where members can learn their credit scores, or one of our lenders would be happy to speak with you.

If you do qualify for 0% financing, you must never miss a payment and always pay on time. If you miss payments or are late, most lenders will add an interest payment on the balance, which then defeats the purpose. Also, it’s likely that with 0% financing, the loan will be shorter and require a higher payment (since there is no interest on the loan). It’s important to understand how these payments will fit into your overall budget and savings plans.

Then there are the special incentives and cashback offers from the dealerships. A caveat to watch out for in these offers is that, to take advantage of the incentive, the buyer must use dealer financing, which may result in higher payments and higher overall cost of the vehicle. Read more about the potential pitfalls of dealer financing here. For some, the rebate may be a viable option. But, remember, just because you are taking advantage of an incentive does not mean you have to forgo negotiating the car’s price. Instead, treat the rebate as a “given” and continue to negotiate.

Considering all the information car buyers must wade through when making a car-buying decision, we encourage you to contact us so we can walk you through your options. Our lenders can help you understand how much payment you can afford considering your budget. And, you may be able to pre-qualify for a rate that will beat any offer at the dealership. Even if you have less-than-stellar credit or are trying to rebuild your credit, we still have options such as our OnPace Auto Loan program.  We also offer the “InGear option.” With InGear, you can get a payment up to 40% lower, without a lease – you have the benefits of ownership. Learn more here.

Contact us today for more information.

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