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The Truth about Zero-Percent Interest Auto Loans

Occasionally, your local dealership may advertise a zero-percent interest auto loan, attracting sundry shoppers surveying the market for a spectacular deal. When comparing this to the average six-or-so percent, it may seem like a magnificent opportunity to obtain an affordable auto loan, but is it really?

Shoppers may be surprised to learn that those with zero-percent interest often overpay. This is because the ad’s allure distracts people from seeing the bottom line. Since most deals follow a zero-down or rebate structure, the money saved by choosing the former ends up pouring straight back into the loan’s monthlies. That money waived at the beginning is really just the interest up-front. Understanding the mechanics of these deals will help you calculate your true savings with zero-percent interest.

Zero-Percent Interest Auto Loan Characteristics

Typically, straightforward zero-percent interest auto loans apply only to new vehicles, though there are variants available for used and refurbished models. Regardless, zero-percent interest auto loans usually span a shorter term and may be difficult for people with poor credit to get a hold of. As with most specials, such contracts give little leeway for negotiation, so ensure that this is the best possible deal before moving forward; do not allow yourself to be dazzled by marketing ploys.

Zero or Deferred Interest? The Difference Matters

At the end of the promotional period, a zero-percent interest auto loan will charge the remaining balance to a monthly account compounded with interest. Deferred interest plans, however, accrue interest during the promotional period, so should you not pay off your balance by the end, you receive a huge invoice for the past 12-or-so months of interest free billing. Since this is written directly into the contract, you are forced to pay. This is why you should always read the fine print — especially on sales and deals.

Zero-Percent Interest Auto Eligibility

As mentioned above, many dealerships require impeccable credit scores of their applicant’s. Since most are not so fortune, zero-percent interest auto loans are not always an option. But this does not mean the market’s void of alternatives. At Trillium Auto Group, we work closely with our customers to ensure the most appropriate rates for your credit situation. Better yet, auto loan approval is guaranteed. So forget about zero-percent and start looking at the bottom line — that is, the monthly savings you will have through our competitive financing plans. To learn more, visit or call us today!

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