Super Fitness Health BlogIf you are thinking of purchasing a new vehicle, you may be confused and frustrated when faced with deciding between a manufacturer’s rebate and 0% financing. Despite the fact that 0% financing seems more appealing than the former, there is no denying the tremendous appeal of using a manufacturer’s rebate as a down payment in combination with a low-interest rate auto loan from your local bank or credit union. Moreover, another benefit of taking the manufacturer’s rebate is that it builds a stronger equity position in a car (as opposed to 0% financing). The end result is the manufacturer’s rebate affords you with the opportunity to be more flexible when trading a car early, because you will owe significantly less on your current auto loan.
The first and most important thing on which you must always focus, when it comes to comparing financing options, is to ALWAYS review the numbers in detail. Also remember that the determining factor is not whether or not you have to decide between a manufacturer’s rebate and 0% financing. If you were an expert auto dealer, you would not be reading this article. Don’t let the former or the latter be the only determining factor for you. The determining factor for you depends on the listed interest rates available for financing, the price of the vehicle and the amount of the manufacturer’s rebate. Often times, you will fare better by choosing to obtain a competitive bank or credit union auto loan, coupled with taking the manufacturer’s rebate.
Which funding option is right for you?
Examine the chart below to determine how financing a new car, truck or SUV at a participating local bank or credit union may reduce your monthly payments and save you money over the life of your auto loan.
Financing through an Auto Dealer
- Loan Terms: 36 Months
- Best Negotiated Purchase Price on Vehicle: $18,000.00
- Manufacturer’s Rebate Applied to Down Payment: None
- Amount Financed: $18,000.00
- Finance Charge: $0.00
- Annual Percentage Rate (APR): 0.00%
- Monthly Payment: $500.00
- Total of Payments: $18,000.00
- You Save: $0.00
Financing through a Local Bank or Credit Union (Option #1)
- Loan Terms: 36 Months
- Best Negotiated Purchase Price on Vehicle: $18,000.00
- Manufacturer’s Rebate Applied to Down Payment: $2,500.00
- Amount Financed: $15,500.00
- Finance Charge: $1,538.72
- Annual Percentage Rate (APR): 6.25%
- Monthly Payment: $473.30
- Total of Payments: $17,038.72
- You Save: $961.28
Financing through a Local Bank or Credit Union (Option #2)
- Loan Terms: 48 Months
- Best Negotiated Purchase Price on Vehicle: $18,000.00
- Manufacturer’s Rebate Applied to Down Payment: $2,500.00
- Amount Financed: $15,500.00
- Finance Charge: $2,058.27
- Annual Percentage Rate (APR): 6.25%
- Monthly Payment: $365.80
- Total of Payments: $17,558.27
- You Save: $441.73
(Notice: You should read the fine print and all of the disclosures, stating the terms of the sale of the vehicle. Rates are determined by a number of factors – amount financed, term of loan and credit history. Contact your bank or credit union for more information. Some restrictions apply. Rates subject to change. A bank and credit union auto loans are open-end consumer loans and the term is provided as a sample to help you estimate the payment terms. All payments calculated are based on 30-day repayment intervals.)
Who can can afford to overpay on his or her next and future vehicle purchases? As a smart shopper, you realize that no rational person is willing to overpay for a car, truck or SUV. Maybe you’ve been meaning to compare rates, but you just haven’t gotten around to it…
Well, stop wasting time. You could start saving money. To buy a car below the car dealer’s costs, you must research the negotiating tactics of savvy car buyers and get the invoice price of the vehicle you deserve.