New question . . . in looking at Mazda I see they have a 0% APR for 60 months option.
Now I realize that this is typically only for folks with really good credit . . . and fortunately we would undoubtedly qualify.
However, there were a few questions.
It states that the amount of down payment and other factors may affect qualification . . . would this mean they would want more or less money as a down payment . . . do you think?
Yes, they probably will want 20% or even 30% down. Too many people these days put little or nothing down on new cars, and even roll in debt from underwater trades. ("
We will pay off your trade no matter how much you owe! Come on down! yea right...
)
And here is the real million dollar question that has stymied me . . . "60 months at $16.67 per month per $1,000 financed with $0 down. What does this mean exactly? Does it mean I would pay $16.67 every month on top of the usual payment . . . or $16.67 for every $1,000 I financed every month? Math is not my forte . . . so treat me as if you were dealing with a simpleton. In fact, let's use a relatively simple example -- let's say the car's purchase price is $25,000 and I put down $5,000 down as a down payment (although truthfully I usually put more down). So I would need a loan for $20,000 . . . what additional money would I be paying every month on top of the repayment amount? Maybe I'm just completely confused, but it seems like what the car company is saying is that there is no interest charge . . . but you'll still be paying a hefty chunk of money every month as an additional charge.
When you see language like this in a financing ad, it literally means what it says. For every $1000 you finance the monthly payment (total of principle, interest, fees) will be $16.67.
$1000 / 60 months = $16.67 per month.
So yes this really is zero percent. If you finance 20k it would be 20 x $16.67/month = $333.33 /month for 60 months.
Sometimes lenders will sneak in fees above and beyond the simple interest rate and the xx per month per 1000 financed wont add up to the number you got if you plug it into a financial calculator. I believe the rules require then to put that statement in so that cant hide stuff like that.
If you go with other finance optiosn and need to check the numbers here is a simple auto loan calculator you can use:
http://www.dinkytown.net/java/AutoLoan.html
Or if they make you choose between zero interest or a cash rebate use this to check the numbers:
http://www.dinkytown.net/java/AutoRebate.html
Zero percent financing, if legit, is the one time I wouldn't bother to put much down and finance as much as you can for as long as you can. Just leave the money in mutual funds and make it work for you.
Question to ask is are they making the profit back somewhere else in the deal? Zero is not the going rate everywhere right now... when I bought my truck the best Toyota would offer was 2.5% and we have 800+ credit. I managed to score 1.6% through a credit union but had to fight for a rate extension as even they have bumped rates into the 2s.
Suggest you get a
truecar price report on the car you are looking at so you know they are not sneaking the finance cost into the deal someplace else. And make sure to not let them sell you extras like dealer warranties either.
