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The problem is in the fine print, which reveals that zero offer don’t equal zero percent at all. These zero percent offers have gotten much better at being clear about the true savings you will experience, but there are drawbacks to these loans you should know about. The advertising for zero percent financing can be misleading. In some deals in the fine print you will see that taking a loan with the dealer at zero percent means that you will have to forgo certain cash incentives. But these cash incentives really add up. You may find you are far better off borrowing the money from your bank and paying cash for the car rather than going for any zero percent financing deal. Check out the fine print in this zero percent financing ad from a major manufacturer having a sale on new cars.
If customers choose zero percent financing, they forgo additional incentives available to cash purchasers. The effective interest rate factoring in these incentives could be up to 8.5 percent. They are admitting that zero percent financing is really the equivalent of an 8.5 percent interest rate. There has been pressure on auto manufacturers to make financing details clearer for consumers. They are doing so, but often the clearer details are buried in the fine print. Not every zero percent deal will be equal to 8.5 percent because the cash incentives will vary, but its clear that zero percent financing is not really what it seems. If a rebate is offered, your best deal may be to take the rebate and borrow money from your bank.