Zeropercent Financing

August 20, 2015


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If car dealers subsidize loan, the customer shall pay a higher purchase price many car buyers the eyes light up when they talk about the cheap zero-percent financing at the dealer. Thus, the eagerly awaited new vehicle seems like a bargain to have become. But a zero-percent financing does not exist, neither does any other cheap loans (1.99 percent or similar). Under certain circumstances, the new owners have paid even more than necessary. If the customer pays the invoice not cash, the car dealers like to gives a credit. Lender is the Bank of the car manufacturer or an independent financial institution.

But no matter who issues the credit, no bank can offer financing, which is well below the market rate. Who gives money, must generate interest. Because the zero-percent financing is winning not the borrower, the broker that pays so the car dealers. How it works: the car dealers agreed with the Bank a special action with zero percent interest rates. The Bank sets for a price, the seller subsidized loans.

The top rate is then on the advertising sign, in reality costs are incurred at the car dealership, however. This means: the vehicle must be sold more expensive. In practice, the buyer can negotiate only a lower discount or no. First what is cheaper in the end, negotiate the best possible discount depends on the negotiation. “Try first to obtain the highest possible discount on the purchase price and not squint you on dealer financing,” advises Hartmut Schmid, product manager for the online aspect online comparison portal. “Then you should search for the cheapest credit.” Who pushed the price optimally, the dealership will give no zero-percent financing. Hartmut Schmid indicates that a low price under certain circumstances is more important than a subsidized loan, a calculation example: suppose the buyer would pay 5,000 euros at the dealership for a new car and finance 20,000 euros with zero percent, then, the credit will cost 20,000 euros. It’s a discount instead of 10 percent out a realistic value, then he can find a particularly cheap loans on the market about a comparison calculator. Currently a first-class, independent credit interest rate is 5.55 percent effectively. For this loan amounting to 17,500 euros, he pays only 18.540 euro of repayment and interest. By Toralf Richter