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Paying off a 0% interest car loan early?

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    bad idea, put the money instead in an interest bearing acct and earn the arbitrage


      They still have to pay for it...


      Just trying to point out some basics of finance here. When a manufacturer or a dealership offers 0% financing, it costs them money. Buy an $18,000 car at 0% financing for five years and someone has to cover the $2,240 in interest (that's how much a customer that borrows at 6% pays in interest). Even manufacturers with their own finance (like American Honda Finance) still owe it to the bank when they offer 0%. These are separate business entities and they will never loan money for free -- the manufacturer just pays them their profit up front... It ALWAYS works this way or the bank would never loan the money. If the dealership advertises 0% financing but no other rebates, dig a little more or call another dealership. Your cash is worth more today than spread out over 5 years...

      Interestingly, I'm one year into a 0% loan and I'm appealing to the bank for a discount to pay off early - after all, they already made all of their profit up front and they stand to make even more money if I pay it off early. Has anyone had any success negotiating this? Even if their opportunity cost is a meager 4% interest, they can make an extra $1,000 on my early payoff. It makes good business sense for them to do it.