It can be a dream come true for people with excellent credit. But for many car shoppers, zero-percent financing is simply not feasible.
Statistics from CNW Research show that only about one-third of buyers who apply for zero-percent financing actually qualify.* And among those, only around 10 percent actually close the deal, according to the National Automobile Dealers Association.**
Why so few? Because of drawbacks like these:
- Shorter loan terms. Some dealers offer 60-month terms, but 36 months is more typical--which means higher monthly payments.
- Fewer models to choose from. The customer may be limited to what's in stock, and therefore, not able to buy the vehicle they truly want.
- No rebate. The customer may be asked to choose either zero-percent financing or a cash rebate.
Can a customer do better than zero-percent financing?
Sure!
By financing with a low rate from Capitol One Auto Finance and taking a dealer's cash rebate (if available), a customer could really save big:
36-Month New Car Loan Comparison
| Annual Percentage Rate |
0% |
3.99% |
| Cost of Car |
$20,000 |
$20,000 |
| Less Equity in Trade |
$4,000 |
$4,000 |
| Less Rebate |
$0 |
$2,000 |
| Amount to Finance |
$16,000 |
$14,000 |
| Monthly Payment |
$444.44 |
$413.27 |
| Total Cost |
$16,000 |
$14,877.85 |
| SAVINGS |
$0 |
$1,122.15 |
Plus, with a Capitol One Auto Finance Blank Check® a customer gains a strong negotiating advantage. (Many customers lured by zero-percent financing get so distracted by the offer that they forget to negotiate the price of the car.) With a Blank Check® a customer doesn't have to worry about financing and can concentrate on negotiating the lowest price.
*Source: Consumer Reports online; November 2002.
**Source: NADA Chief Economist; November 2002.
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