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For assistance running the numbers,
call us at 1.888.786.2791,
visit us at www.stmarysbank.com or stop by any retail office.
0% Financing vs. Cash Rebate
Presented with the choice of a 0% loan or cash rebate
on a new automobile, most people think 0% financing is
the best option. However, this may not be the case – and
before deciding, you need to read the fine print and do
your homework.
Limited 0% Financing
Most 0% financing programs carry limitations that may
affect your buying decision based on your individual
circumstances. For example, a larger down payment may
be required, there could be prepayment penalties and the
term of the loan may be shorter – say two to three years
versus four to five years. The special financing may only be
for buyers with exceptional credit AND negotiations on the
final price may be limited.
Fewer Choices
Whether it’s 0% financing or a cash rebate, these incentives
may affect your choice of vehicles. These specials may only
apply to certain models, options, year of manufacture or only
to the cars on the lot. Many zero-interest deals cannot be
combined with other offers; and if the cash rebate and 0%
financing are offered, you often have to choose one or the
other, not both.
Do the Math
Even if you qualify for 0% financing, the rebate coupled with
a good loan may offer the best solution. See the chart below that compares an interest-free option to one with a
cash rebate.
Interest-Free Rate vs. Cash Rebate
60-month Comparison |
| |
Interest-Free |
Cash Rebate |
| Rate (APR) |
0.00% |
3.74%* |
| Sample loan amount |
$15,000 |
$15,000 |
| Less equity in trade |
$2,000 |
$2,000 |
| Less rebate |
$0 |
$2,500** |
| Amount to finance |
$13,000 |
$10,500 |
| Monthly payment |
$206.35 |
$183.82 |
| Total Cost |
$13,000 |
$11,580.82 |
| Savings |
$0 |
1,419.14 |
|
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Let Us Help
If you need assistance running the numbers, want more
information on St. Mary’s Bank auto loans or would
like to get preapproved, call us at 1.888.786.2791, visit www.stmarysbank.com or stop by any retail office.
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This publication does not constitute legal, accounting or other professional advice. Although it is intended to be accurate, neither the publisher nor any other party assumes liability for loss or damage due to reliance on this material. Images may be from one or more of these sources: ©Thinkstock, ©iStock, ©Fotolia.