Zero! Zero! Zero! – The Real Story
by Remar Sutton, DCU StreetWise National Spokesman
Zero down! Zero interest! Zero payments for Six Months! Hey, let's all rush down to the dealerships and jump on the zero bandwagon! What can go wrong with a deal like that?
Just about everything. Since triple zero ads are being promoted so heavily for the next months, you should know the facts, starting with the fact that these promotions, in my opinion, are some of the most deceptive and unfair I've seen in years. By using word games and by deliberately obscuring details, the promotions hurt unwary consumers' pocketbooks in big ways: Read the very fine print and you'll see this:
- Zero down payment doesn't' mean no money – Every buyer still has to pay tax, tag, and license, which can run over a thousand dollars. That's a down payment in my book.
- Zero Payments for Six Months! – Are the finance companies being nice and making your first six payments for you? Of course not! They are doing one of two things: either adding the six payments to the end of your contract, or, even worse, financing those first six payments. Either way means you pay more interest.
- Zero percent! – If you've been reading the news lately, you've seen that zero percent is legal bait and switch. According to CNW Marketing Research, barely 9 out of a hundred people drawn to a dealership because of zero percent financing actually get it. To make matters worse, the research company found that consumers don't negotiate on the actual price of the car when they go to dealerships for zero percent. They don't realize the price of the car and the cost of financing are two separate issues. Those consumers can pay thousands more than they need to pay.
Can you do better than zero percent?
If a rebate is offered as an alternative to 0%, the answer is often yes!
To do so, you'll need to apply the rebate as a down payment on the vehicle. Look at the two
examples below – one with a $2,000 rebate and one with a $3,000 rebate. At DCU's current rate for members with the best credit, you can do better.
| Two examples | 48 Month Auto Loan | 60 Month Auto Loan | ||
|---|---|---|---|---|
| 0% APR Factory Offer | 5.25% APR at DCU with $2,000 Rebate* | 0% APR Factory Offer | 5.50% APR at DCU with $3,000 Rebate* | |
| Cost of new car | $20,000 | $20,000 | $25,000 | $25,000 |
| Less equity in trade | $3,000 | $3,000 | $4,000 | $4,000 |
| Less rebate | $0 | $2,000 | $0 | $3,000 |
| Amount to finance | $17,000 | $15,000 | $21,000 | $18,000 |
| Monthly payment | $354.16 | $347.14 | $350.00 | $343.82 |
| Total financing cost | $17,000.00 | $16,662.75 | $21,000.00 | $20,629.26 |
| Take the rebate, apply it to the car, and finance with DCU to save... | $337.25 | $370.74 | ||
* APR=Annual Percentage Rate. DCU loan rates are based on your personal credit history and are subject to change.
What should you do?
Compare any dealer's financing offer to DCU's. Ask the dealer to completely fill out a copy of their finance contract, but don't sign it yet. If the dealership refuses to give you a completed copy of the contract to take with you, chances are, they aren't cheaper.
Bring the unsigned contract in to any DCU Branch or fax it to us at 508/263-6392. DCU will assess their
loan and we will tell you if we can beat their financing or not. If we can't beat their offer, we will tell you so, and send you back to the dealership.
The proof is in refinancing
In 2002, 538 members saved $983,500 in interest by moving their auto loans to DCU. In 2003, 588 members saved $1,231,184 in interest by moving their auto loans to DCU. And in 2004 649 members have saved $1,687,300 in interest by moving their auto loans to DCU.
Every one of these members thought they were getting a cheaper rate at the dealership, and found out they were wrong. Let us assess your current auto loan. Find your old finance contract, loan agreement, or payment booklet or anything that has the following information:
- How much money you financed,
- How much your payments are,
- How many payments you have remaining.
Fax the above information to us at 508/263-6392. Please include your name, member number and a way to contact you. You can also email us at dcu@dcu.org or visit any DCU Branch.
Every day we save members money over dealer financing – often even when zero percent financing is offered. What should you do if you're in the market for a vehicle and see one of these ads? Slow down! Remember that speed in the car business can cost you thousands. Use StreetWise to help save those thousands!
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Digital Federal Credit Union 220 Donald Lynch Boulevard PO Box 9130 Marlborough, MA 01752-9130 508.263.6700 • 800.328.8797 |
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© 2008. Digital Federal Credit Union