Comments on: Is Buying a New Car For Zero Percent Interest Loan a Good Idea?

By: Highlights (02.04) | Entreprelife

Highlights (02.04) | Entreprelife — Sat, 04 Feb 2012 13:02:07 +0000

[...] Is Buying A New Card For Zero Percent Interest A Good Idea? — Joe gives his take on a popular car buying tactic. [...]

By: Alex

Alex — Mon, 30 Jan 2012 22:05:30 +0000

Joe, this is probably the best article on the downside of using 0% interest that I have ever read.

I will share this with people for years and years.

Sad I missed it the first time around, but I’m glad I caught it today!
Alex´s last [type] ..Ridiculous Wal-Mart is Ridiculous

By: Joe Plemon

Joe Plemon — Tue, 10 Jan 2012 14:46:44 +0000

Bill,
Thank you for your well thought out comments. For the reasons you stated, under the conditions you stated them, I agree that there is not much difference between buying new at a zero percent loan or buying new with cash. However, most of my post is a comparison of paying cash for a used car versus borrowing money for a new car at zero percent. I am obviously a huge advocate of paying cash for a used car.

One more thing: I re-checked my source of what percentage of millionaires buy new cars…you are right and I am wrong. Whereas 76.5% of millionaires are not driving new cars, only 37% report that their most recent car purchase was not a new car. My bad, and thanks for calling me on it. I will correct my error in the post.

By: Bill from Joisey

Bill from Joisey — Tue, 10 Jan 2012 13:24:39 +0000

Depreciation both immediate and over time are the same regardless of the manner in which you purchase your car. It only factors in if you want to consider a good used car vs new and have somebody else take that initial depreciation hit. Even then you need to recognize the reduced trade in value of a car that is a year or two older when you want to replace that car. Discipline in how much you can afford realisticallly is an aside when concerning financing choices. Discipline in budgeting is the BEGINNING of the car buying process. So taking a zero interest rate loan or paying cash is a moot point if the assumption is there is no discipline in the budget process. If you save money to buy a car in cash, that money might be in a savings or money market account for safety but offer very low investment return. Taking out a zero rate loan, vs paying out a wad of cash, can also be viewed as leaving money in a more rewarding investment over 3-5 years. Sure there are savings and price negotiating leverage in paying cash and doing this is preferable to a long term loan at 4-6%. However, basic initial discipline suggests you negotiate to a price you want and no more BEFORE you commit to a method of paying for the car. Finally, I SERIOUSLY doubt that 70% of the wealthy buy used cars unless you are counting 3rd cars and/or collector cars. The higher end car market would not be as large as it is even in tough times if only 30% of the wealthy bought new.

By: Selling Your House to Pay Off Debt: Good Idea or Bad?

Selling Your House to Pay Off Debt: Good Idea or Bad? — Thu, 27 Oct 2011 22:49:06 +0000

[...] month until you are confident that you are in control of your money. 2. Get rid of other debt. If car payments are dragging you down, get rid of your car. Give up eating out, vacations and satellite TV until [...]

By: Gao

Gao — Mon, 22 Aug 2011 15:03:52 +0000

I think it all depends on the situation. If you are set to buy a brand new car, it used to be you have to choose between a 0% financing deal or a cash back deal. It all depends on the financing you can get, you may save more on the 0% financing than the upfront cash back. or if you find a great financing on your own, then the cashback might be better.

(But recently, I was looking and some places have both a 0% financing deal AND a cash back deal. But on the other hand, it was a Kia, so I doubt you can find one on a more popular model such as a Honda. )

By: Buying A Car When You Have Poor Credit

Buying A Car When You Have Poor Credit — Tue, 05 Jul 2011 14:51:47 +0000

[...] the next day with news that the bank would require a very substantial down payment if they were to make the loan. With very little down payment money on hand, Randy and Judy were quite disappointed. To make [...]

By: Carnival Of Personal Finance #249: Who's Awesomest? Pirates Vs … | Credit Wise Info

Sun, 29 May 2011 12:29:38 +0000

[...] Is Buying a New Car for Zero Percent Loan a Good Idea? by Personal Finance By The Book. Ninjas never take income to buy a car, that is flattering awesome. [...]

By: You Look So Wealthy. You Must Be Broke! - The Wealth Artisan

You Look So Wealthy. You Must Be Broke! - The Wealth Artisan — Fri, 27 May 2011 21:06:21 +0000

[...] Porsche: Financed, by the skin of his credit score. They definitely didn’t get a zero interest new car loan! [...]

By: Four Ways to Cope With Rising Gasoline Prices

Four Ways to Cope With Rising Gasoline Prices — Thu, 31 Mar 2011 14:48:34 +0000

[...] I do not recommend that you go into debt to buy a newer car. However, selling your gas guzzler and paying cash for a more efficient one is [...]