Announcement

Collapse
No announcement yet.

Paying off a 0% interest car loan early?

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    #16
    bad idea, put the money instead in an interest bearing acct and earn the arbitrage

    Comment


      #17
      They still have to pay for it...

      wincrasher-

      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.

      Comment

      Working...
      X