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Personal and Business Banking

About "Zero Percent Financing"

StreetWise Auto Buying Resources

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  • Article

About "Zero Percent Financing"


  1. That not many people qualify for manufacturer zero percent financing
  2. That you can often save money by taking the rebate and financing at DCU instead
  3. That you can actually do better than zero percent

About "Zero Percent Financing"

"Zero down! Zero interest! Zero payments for Six Months!" What can go wrong with a deal like that? Just about everything. Triple zero ads are promoted heavily at times, so you should know the facts, starting with the fact that these promotions can be deceptive and unfair to the consumer. By using word games and by deliberately obscuring details, the promotions often hurt unwary consumers' pocketbooks in big ways: Read the very fine print and you'll see things like this:

Zero down payment is not no money required – Every buyer still has to pay tax, tag, and license, which can run over a thousand dollars. That's as good as a down payment.

Zero payments for six months – Read the fine print. You'll often find that interest is accruing over those six months and making your loan balance bigger. As a result, you'll pay more interest over the life of the loan.

Zero percent! – In addition, you might have 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 a lot 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 recent DCU's new car rates for members with the best credit, you can do better.


 Two examples 48 Month Auto Loan 60 Month Auto Loan
  0% APR Factory Offer 2.99% APR at DCU with $2,000 Rebate* 0% APR Factory Offer 2.99% APR at DCU with $3,000 Rebate*
Cost of new car $22,000 $22,000 $30,000 $30,000
Less equity in trade $3,000 $3,000 $4,000 $4,000
Less rebate $0 $2,000 $0 $3,000
Amount to finance $19,000 $17,000 $26,000 $23,000
Monthly payment $395.83 $376.21 $433.33 $413.18
Total financing cost $19,000.00 $18,058.03 $26,000.00 $24,790.62
Take the rebate, apply it to the car, and finance with DCU to save...   $941.97   $1,209.38
* APR=Annual Percentage Rate. DCU loan rates are based on your personal credit history and are subject to change.

You try the math – compare special manufacturer rate or rebate offers
Fill in the information about your loan and rebate options and select Calculate. The cheapest option will appear in the window below.


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 the last several years, thousands of members saved millions of dollars 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 and see if we can lower your payment, your interest, or both with Auto Refinancing. Read more about Auto Refinancing along with member ratings and reviews.

Every day we save members money over loans offered at the dealerships – 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.