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What is the "deal" on Ford "0%" financing?

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jmrtsus

jmrtsus

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Thread Starter #21
I went in during the 0% or rebate deals they were running in March. Fully planned to put nothing down and trade nothing in. Got the otd price from them, and ran numbers myself. Ended up saving about 9 bucks a month going 0% over taking the rebates on a 5 year. It all ends up working out the same, except the things they try to add on at the end, or were on from the beginning and never had the little addendum sticker like they're required to have, but that's another story for another time. Be weary of AV Ford in Lancaster for that shit though

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Be wary of anyone in a new car dealership if their lips are moving. The 0% is good for some and not for others. My daughter just took it on a FiST. The $2000 rebate you give up is like paying a 10% loan on a $20k FiST .........very high if you have excellent credit which most don't have. On a $40K car like a Mustang it is a 5% loan and a good deal for many. Glad it is over for you!
 


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#22
Be wary of anyone in a new car dealership if their lips are moving. The 0% is good for some and not for others. My daughter just took it on a FiST. The $2000 rebate you give up is like paying a 10% loan on a $20k FiST .........very high if you have excellent credit which most don't have. On a $40K car like a Mustang it is a 5% loan and a good deal for many. Glad it is over for you!
I got 4k off MSRP and 0% in Georgia. When I first emailed, they said they wouldn't do it. I said that was a no go and disengaged. The sales guy called back a few hours later with the deal I wanted (minus 2k factory and another 2k in dealer money for 4k total). He also gave me the upper end of the KBB trade in value on my car. I paid for one dealer installed security option (some stupid stickers that turned the underlying black paint purple) but it was only $199, so I didn't fight about it.

I would highly recommend this dealer and my sales guy in particular. It was really a great experience, all conducted through email. I showed up, looked the car over and signed papers. Took about 90 minutes.

I kept waiting for the "surprises" and none ever happened. If you're close enough to buy from a Georgia dealer, they're south of Atlanta in Conyers. Had a great service experience with them recently after trying to get an issue resolved at a dealer much closer to my place too.
 


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#23
If you have shopped new cars you will have seen Ford's so called "0%" financing. Is it really 0%? NO! The offer is $2000 OR "0%" financing. In other words you surrender the $2000 to get the O% financing. So if you finance a $20K ST you will pay $22K for the car with the "0%" loan. That $2000 is in effect the interest you pay. In this case your "0%" just cost you 10% of your purchase price. So your "0%" is in reality a 10% loan. A terrible rate if you have good credit. On a $40K loan it works out to a "5%" loan.

The so called "0%" loan is just a prepaid interest loan. Your bank will allow you to pay your interest up front like Ford if you want a "0%" loan from them.

Lesson here.......There ain't no free lunches. The best part is according to Ford financing last year less that 20% of buyers qualified for the "0%" financing. It typically take a 740 and up credit score. If you qualify for the Ford "0%" your bank will probably beat it. To determine what you are actually paying in interest on the "0%" just divide the amount to be financed by 2000. On a 20K loan that would basically be a 10% loan using simple calculations.

A comment from the Finance Manager when we turned down the "0%" was that she advises her "well heeled" (my wife was not even wearing heels!) customers that it is a rip off! And quickly offered much cheaper options that our bank beat.

Caveat Emptor! Buyer beware!
i always wondered how in the hell is ford gonna make money if they are doing 0% interest. glad you did your research and informing us! all makes sense now!
 


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#24
i always wondered how in the hell is ford gonna make money if they are doing 0% interest. glad you did your research and informing us! all makes sense now!
It shouldn't really make sense, because the math is off. If you're financing 20k at 0%, you're not paying 22k - you're paying 20k. The alternative is to take the 2k rebate and finance/pay 18k. And, that being the case, the 'interest' you end up paying, would be 2/18 or 11%, not 10%. And bear in mind, that 11% is the total, not the rate. So if you end up with a 3.5% apr loan on 18k principal, then for the equivalent 72 month term the interest you pay will approximate that 2k rebate you took. Ford Credit actuaries are no dummies.

The takeaway shouldn't be that 0% loans are rip-offs, they're simply another option.
 


Dpro

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#25
It shouldn't really make sense, because the math is off. If you're financing 20k at 0%, you're not paying 22k - you're paying 20k. The alternative is to take the 2k rebate and finance/pay 18k. And, that being the case, the 'interest' you end up paying, would be 2/18 or 11%, not 10%. And bear in mind, that 11% is the total, not the rate. So if you end up with a 3.5% apr loan on 18k principal, then for the equivalent 72 month term the interest you pay will approximate that 2k rebate you took. Ford Credit actuaries are no dummies.

The takeaway shouldn't be that 0% loans are rip-offs, they're simply another option.
I had explained this earlier in figuring out your rebate to loan offset with an example of my own purchase. My car msrp’d at $25,125 the dealer would have done it for around 23k with the options it had. I managed to put together $5400 in discounts , rebates and private cash offers. Which brought my car down to $19678 with th recaros black wheels tri color paint $2965 in options.

So say I got o% at 23k . My loan at 3.89% if allowed to to go to maturity would have been $1700 in interest as I put 4k down to bring down the borrowed amount and drop monthlies. So 23k minus $1700 comes out to $$21300.

Now if you subract $21300 from 19678 I am still saving $1633 by taking the deals over doing 0% financing so its a win for me.

Now if you add in the fact that I have been slamming my loan and will only wind up paying $500 in interest then you see I saved even more over the 0% financing. Pretty much close to 3k in fact. Thats also why I tok my cap one loan at 3.89 with fast approval rather than trying to shave one more percentage point on the rate at a credit union.

0% financing only works when there are not enough incentives to offset the higher the cost as anytime you take 0% financing you do pay more for the car. Plus most 0% finance loans are 60 months or more. One really does not want to get into a long term loan like that unless they plan on slamming it and or can slam it. Otherwise you could wind up upside down value wise 4-5 years out in what you owe.
 


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jmrtsus

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Thread Starter #26
What I was trying to say is if you are down to $20K OTD with the rebate it goes to $22K to take the 0% financing. So if you can get a $20K 3.5% loan @72 months you would pay $22248 total. Or $22K @ 0% 72 months it would be $22000. However most people cannot get the 3.5% rates and the Ford financing becomes a strong selling point. With high student loans my daughters credit is not so hot so the Ford 0% was good for her on her new FiST. On the other hand my wife did better with her Credit Union than Ford could do on her new Mustang GT/CS. The point was it is not the "free" lunch some think it is. So I agree it is not a "rip off" but if you have really good credit you can do better. The total cost is 10% of the $20K car cost not simple interest. On a $40K car it is a total cost of $42K or 5% of total cost. And on financing $60K it is only 3% of total cost. It all depends on your credit score and how much you finance, the cutoff for the 0% is a score of about 750 and that score can usually get you a better deal on a low priced car.

The takeaway shouldn't be that 0% loans are rip-offs, they're simply another option.[/QUOTE]
It shouldn't really make sense, because the math is off. If you're financing 20k at 0%, you're not paying 22k - you're paying 20k. The alternative is to take the 2k rebate and finance/pay 18k. And, that being the case, the 'interest' you end up paying, would be 2/18 or 11%, not 10%. And bear in mind, that 11% is the total, not the rate. So if you end up with a 3.5% apr loan on 18k principal, then for the equivalent 72 month term the interest you pay will approximate that 2k rebate you took. Ford Credit actuaries are no dummies.

The takeaway shouldn't be that 0% loans are rip-offs, they're simply another option.
 




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