Getting Approved for an Auto Loan to Buy Quality Used Cars
Automakers have a financial company set up to handle Car Loans for purchases made at their Used Car Dealership, they will frequently offer Low Auto Loan Rates to convince more consumers to purchase vehicles. Sometimes, these rates even go as low as 0% APR. Getting a No Interest Auto Loan is essentially like getting free money.
Not only do you avoid paying interest, you actually end up paying less than the agreed upon price of the vehicle when you take into account the time value of money. Look at it this way: if you were to purchase a vehicle with cash, you would avoid interest, but the money would be gone. However, with a zero percent loan, you can avoid interest while investing the excess money and getting a return on it before paying off your automobile loan. Essentially, a 0% loan offers the best aspects of buying a car with cash and buying an Automobile with a loan.
Used Car Dealer and Car Loan Approvers London Ontario
The attractiveness of a no interest loan is fairly obvious, so if that choice is available why should you consider any other option? At times, the automakers will offer a sizeable cash rebate as an alternative in place of the 0% loan. In some cases, the final price with the rebate may be a better deal in terms of the time value of money, depending on a variety of factors.
This includes the price of the vehicle, the length of the loan, and the amount of the down payment. In most cases the wise decision is to take the 0% loan if it is there. However, you may want to look at the net present value of the total payments for each option to make sure. You can ask the dealership to calculate these figures and their financial staff should have no problem presenting them to you.