In this article we will examine the difference between cash back and zero percent interest in auto loans incentives. We frequently hear car ads boasting these special deals, but knowing which is best is not always clear.
Being prepared before you go car shopping is always a good idea. With these incentives it could be even more beneficial to do a little homework. By using a loan payment calculator found on Edmunds.com you will have the math done ahead of time.
To begin with, you will need to know the make and model of the car you are interested in to see if the incentives apply to the vehicle you want. The manufacturer drives these incentives on models that have not sold the way they forecasted, and they are looking to get them off the lot to make room for different models.
Once you have decided the make and model you will need the total cost of the car including taxes and all applicable fees. You can visit the manufacturer's website and find the MSRP for the vehicle of your choice.
Now you have all the pertinent numbers to put into the auto loan calculator to determine which would be better, the zero percent interest or the cash back incentive. This will help you see the complete picture for the term of the entire loan, and can clearly see which offer would save you the most money.
There are other factors to consider when deciding whether you should take the zero percent or cash back incentives.
First, you will need a near perfect credit score to qualify for the manufacture's zero percent interest program. It is also important to remember that the manufacturer reimburses the dealership for either the zero percent interest or the cash back rebate. This does not come out of the pocket of the dealership so you still have room to negotiate on your vehicle. Use your negotiating skills to get the best possible price for the car you want.
Next, be sure that you completely understand the incentive for the zero percent interest program. One hidden factor might be that the zero percent interest is only for the first 6 months and not for the entire term of the loan. If this is true, you will want to find out what the interest rate will be after the 6 months is up. This way you can calculate if it is best to take the zero percent interest program or not.
Armed with these facts and doing your homework ahead of time can give you the information you need to make the decision if zero percent interest or cash back is best for you on your next vehicle.
By Mike Reitz
Being prepared before you go car shopping is always a good idea. With these incentives it could be even more beneficial to do a little homework. By using a loan payment calculator found on Edmunds.com you will have the math done ahead of time.
To begin with, you will need to know the make and model of the car you are interested in to see if the incentives apply to the vehicle you want. The manufacturer drives these incentives on models that have not sold the way they forecasted, and they are looking to get them off the lot to make room for different models.
Once you have decided the make and model you will need the total cost of the car including taxes and all applicable fees. You can visit the manufacturer's website and find the MSRP for the vehicle of your choice.
Now you have all the pertinent numbers to put into the auto loan calculator to determine which would be better, the zero percent interest or the cash back incentive. This will help you see the complete picture for the term of the entire loan, and can clearly see which offer would save you the most money.
There are other factors to consider when deciding whether you should take the zero percent or cash back incentives.
First, you will need a near perfect credit score to qualify for the manufacture's zero percent interest program. It is also important to remember that the manufacturer reimburses the dealership for either the zero percent interest or the cash back rebate. This does not come out of the pocket of the dealership so you still have room to negotiate on your vehicle. Use your negotiating skills to get the best possible price for the car you want.
Next, be sure that you completely understand the incentive for the zero percent interest program. One hidden factor might be that the zero percent interest is only for the first 6 months and not for the entire term of the loan. If this is true, you will want to find out what the interest rate will be after the 6 months is up. This way you can calculate if it is best to take the zero percent interest program or not.
Armed with these facts and doing your homework ahead of time can give you the information you need to make the decision if zero percent interest or cash back is best for you on your next vehicle.
By Mike Reitz
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