Question: The auto dealer offered me no payment for one year. Sounds like a great deal … am I missing something?
Our answer: Yes. While it sounds like a good deal up front, the dealer is not looking to help you. Instead, he wants to make a quick sale and is tempting you with no payments for a year.
So what’s wrong with no payment for a year? Well, what the dealer isn’t telling you is that even though you’re not obligated to make payments, interest on the loan is accruing constantly from day one. That could mean hundreds, maybe thousands of dollars added to the amount you owe on the auto loan. The second problem is that, while you’re driving your car payment-free for 12 months, that car is depreciating by at least 20-30% of what you paid for it. So you have a car worth significantly less than the loan you owe on it, which is not a good position to be in.
Your best bet is to arrange financing before shopping for a car. You can come into Education First FCU to discuss our auto loan options and we will help you get the financing that makes sense for the car you really want.