• 2019-02-25

Is 0% financing for you? How not to get duped when buying a new car. 

There is no such thing as a free lunch, but offers of 0 per cent and outrageously low-interest vehicle financing seem to contradict that adage.

Here's the thing: "Interest-free" new-car loans can actually end up costing you more than if you had paid a higher interest rate.

Buying a new or used car is a significant financial decision. Here's the thing: "Interest-free" new-car loans can actually end up costing you more than if you had paid a higher interest rate. Example, You buy new and get 0%, over 84 months. sounds good. $30,000 plus $4500.00 HST you pay back $34,500.. ($410.00 a month ) no big deal or is it?l. You go to trade it in four years 48 month You paid $19,680 off and still owe $14,820.

You buy slightly used $24,000.00 plus HST $3600. and $2900 interest equal $30,500. Over 48 months with the same payment you paid off $19,680, you only owe $10,640.. according to Edmunds both car if in the similar condition would be worth the same trade-in amount. Say $12,000.  By buying slightly used You would have positive equity at trade  of $1400.00. But by buying new you would have negative  of $2800.00. this just causes a downward credit spiral that is never ending.

Let someone else take the first year hit.. Hugs Jim