Finding the Best Vehicle Finance Rate

May 14th, 2009 admin Posted in Auto Loans | No Comments » 99 views

Your old car has been on its last legs for a while now, and it has finally put you down. You have to find another car so that you can get back and forth to work. Alternatively, you have been looking for another vehicle for quite some time, and you have finally found the car of your dreams. No matter which of these scenarios best fits your situation, the result is going to be the same. You are going to need to secure financing for your car, unless you are fortunate enough to have stacked back the cash with which to purchase a vehicle outright.

If you are like most people, not only will you need a financing solution in order to drive that new car home, but you are also hoping to find the best finance rate possible. You have probably seen those ads on television for a local finance company that proclaimed in big, bold letters “We Offer Zero Percent Financing”, and you’ve wondered if this was something that you should look into. Even though this sounds as if it is the best type of vehicle financing available, the truth is that zero percent financing is not for everyone. In fact, it is nothing more than a form of marketing.

In order to qualify for zero percent financing on a car loan, you need to have very good credit, with a score of around 750 or more. You also need to earn a certain amount of money every year. Research shows that out of the many people who attempt to qualify for this type of vehicle finance rate, only around 5 to 10 percent can be approved. Some of these people more than likely wish that they had not been approved.

A zero percent finance rate is associated with a loan that usually must be paid off in about two years. The short amount o time is going to mean a higher monthly payment, especially if you are purchasing a new car. This alone is enough to turn off many who qualify, especially when they discover that one missed payment means the contract they would sign at purchase becomes invalid. A high interest rate would immediately come due – interest that started to accumulate the day the car was purchased. You also run the risk of being assessed penalties along with this high interest.

Some people are so anxious for the car they have chosen that as long as they qualify for zero percent financing, they are going to purchase the car using that option. They are so pleased that they are not paying interest that they tend to ignore many other aspects of the contract that they signed. You have lenders and auto dealers who have dubious motives for offering the zero percent rates. Most people will not study the contract closely enough to notice that they were charged a higher price for the car they bought than what was quoted to them by the lender or dealer. Even if they do notice, it is highly unlikely they will say anything about it, as they feel that they are getting a really great deal on the car by not paying interest. Some lenders and auto dealers depend on these gullible customers to help line their pockets with extra cash.

Don’t be fooled by a zero percent finance rate for car loan financing. Sure, it may sound good, but in the end, you will wish you had chosen another type of auto financing.