Car companies and dealerships love to aggressively promote their best deals. Many of these deals include zero percent financing on a new vehicle. However, there's a lot the advertisements don't tell you about these deals, and what they do tell you is buried in fine print. Oftentimes, deals such as zero percent financing come with many other strings attached.
Credit Requirements
Perhaps the biggest misnomer about the car offers you hear advertised is that they're not actually available to everybody. The fine print of car advertisements tells you the truth -- namely, the offer in question is only available to people with excellent credit scores. If you fall outside of this group, not only do you not qualify for offers such as zero percent financing, but you may end up paying far more than you expected.
Financing Terms
Another item hidden in the fine print of car advertisements is specific criteria that must be met in order to qualify for the best offer. These requirements include a specified down payment amount and length of term. A zero percent financing offer might come with a stipulation that you must pay off the car within three years, whereas a promotional rate with finance charges may require you to finance the car for five years or more. The latter can be particularly devastating, especially if the contract includes a penalty for paying early.
Dealer Financing
When a dealer makes a special offer to you, such as zero percent financing, one of the requirements is that you must finance the car directly through the dealer's bank. If your workplace has a credit union, or if you have a strong relationship with a different bank, you won't be able to take advantage of your connections. Also, the dealer's finance company may have policies that are totally different from what you're used to. Since you won't get to find out the inner workings of the company until you sign on, it's possible that you could become stuck in an untenable situation for years to come.
Hidden Costs
Zero percent financing sounds like an unbeatable deal, but according to the Consumer Credit Counseling Service of San Francisco, it comes at a cost. While the dealer will be happy to give you a car with zero percent financing if your credit score is excellent, the dealer will also be happy to overcharge for items such as extended warranties and application fees. Furthermore, zero percent financing offers aren't available on all cars. The car of your dreams might be subject to a different promotional rate, which can mean paying thousands more in finance charges than you planned.
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