We've all seen the advertisements for low-rate financing. There's 0%, 2.9% and 3.9%. Many manufacturers are also offering rebates as an alternative to low rates. What does this mean to you? Is the low rate the best option or does the rebate make more sense?
"Approximately 15% or fewer of the people who come in for the low-rate financing actually leave with it," according to a phone survey of dealerships conducted by Sam Crystal, President of MemberAdvocate.com.
What is happening that makes so few people eligible for these special rates?
- Not everyone can qualify for the low rate financing. You generally must have near-perfect credit to get the best rates.
- In many cases, financing or rebates is available only on certain models
- Monthly payments on low-rate loans might be more than members can afford because some of the financing deals are short term: 24 to 36 months.
- Large down payments may be required.
- Dealers may require customers to pay full sticker price
- Some 0% loans are for an initial grace period, which is followed by a higher APR.
Keep in mind that these financing offers push individuals to shop for cars. However, once inside the dealership, many consumers simply don't qualify for the offers. If they don't qualify, they are possibly sold other merchandise that may not be in the buyer's best interest. Stick to the model you set out to buy.
Take the time to compare. If you do qualify for a low rate or a rebate, it may work in you best interest to take the rebate and the UCU financing. Often times, taking the manufacturer's rebate and the UCU loan will reduce the amount your loan balance and it will reduce your monthly payment, resulting in a lower total cost over the term of the loan. Check out a comparison chart of costs.
Before you buy, check out your options at UCU. Give us a call and we'll help calculate the differences in the loans. Or, go online to our loan calculator to make your own comparisons.
UCU is here to help you with you lending needs. Apply for your loan on-line or call during business hours (7a-5p, M-F and 9a- 1:30p, Saturday) at (310) 477-6628, ext. 1!
