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

jmrtsus

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#1
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!
 

Jerickson88

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#2
I got the 0%, payment was low enough, fit my budget. I get what you're saying but I put $500 down, and didn't get the 2k (which I didn't have anyways do nothing lost)

Did I over pay? It was Dec 2016, Ford wasn't giving them away then. I paid 20k out the door. They PDI the car while I was waiting.
 
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#3
They offer 0% for a reason- it's an advertising ploy to get you in. It means you need perfect credit to qualify for the 0%, terms may be only 24 months and you do not get the rebate(s) and/or discounts and pay near full sticker price for the vehicle. Way, way better to get as many rebates and discounts as you can and get your own financing or pay cash. Do the math and you will see. The dealer gets a kick back on the interest you pay on the loan if you finance through the dealer.

Now there are a very limited number of times when a dealer will offer 0% WITH the rebates but it's usually on cars that do not sell and/or they have too many of.

Best bet is to read the fine print and you will see all of the exclusions.
 
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#4
It's not a scam, it's a $2k incentive that you can use in different ways. which one is smarter is based on available interest rates that you qualify for. The lower the price of a car, the better the cash looks.
 

Jerickson88

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#5
It's not a scam, it's a $2k incentive that you can use in different ways. which one is smarter is based on available interest rates that you qualify for. The lower the price of a car, the better the cash looks.
They are playing number hockey to sell cars. It's like the family guy episode about the boat mystery box and time share.. the 2k was never yours to begin with, nothing lost at that point.
 
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#7
They are playing number hockey to sell cars. It's like the family guy episode about the boat mystery box and time share.. the 2k was never yours to begin with, nothing lost at that point.
It's only a scam if that $2k is not a limited time offer. The grey area argument is that ford basically always has some promotion going on, but that's pretty typical. My car was an 18 base model, sticker 23k, ford put in like $3k, the dealer kicked in 2k and it was now an 18k car before haggling.

It's actually to your benefit because if the car has a fixed lower price then your resale would be worse when people compare what it cost new to what they pay used.
 
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jmrtsus

jmrtsus

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Thread Starter #11
They offer 0% for a reason- it's an advertising ploy to get you in. It means you need perfect credit to qualify for the 0%, terms may be only 24 months and you do not get the rebate(s) and/or discounts and pay near full sticker price for the vehicle. Way, way better to get as many rebates and discounts as you can and get your own financing or pay cash. Do the math and you will see. The dealer gets a kick back on the interest you pay on the loan if you finance through the dealer.

Now there are a very limited number of times when a dealer will offer 0% WITH the rebates but it's usually on cars that do not sell and/or they have too many of.

Best bet is to read the fine print and you will see all of the exclusions.
You are correct the 0% is a bad joke for most people and a marketing gimmick. Right now with Ford you need a 740(850 is perfect) credit score and it is 6 years financing. But keep in mind 0% financing on a $20K car is a 10% loan when you give up the $2000 cash not 0%. If you have cash to pay you would be silly to do it. Why would you give up a 10% yield you can get on your cash in the market when you can get a 3-5% loan to finance with that credit score? You would lose money to pay cash. As to pricing right now with leftover 2018 ST's still around all prices are low. New 2019 ST's are selling for lots less than a 2016 cost with a great price back then. But if someone is not in the market no price should make them rush out to spend money.
 

LilPartyBox

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#12
The way to make this decision is to run the numbers for each specific case.

Say you negotiate the car down to 20k, all in. You put down $1,000 and take a loan for 19k @ 5% for a typical 5 year term. You take the 0% and at the end of that loan you would have SAVED about $2,500 in interest.

The total cost for the car would be interest ($0) + principal + down payment = 19,000 + 1000 = 20,000.

The same deal but this time take the $2k "gift". So now the car is 18k all in. YAY I WIN! You put down the same $1,000 but this time your loan is for 17k @ 5% for the same 5 years. At the end of this scenario you would have PAID out about 2,200 in interest, not saved it!

BFD, the total cost for the car now = 2,200 + 17,000 + 1,000 = 20,200. Only $200 more...! Some gift!

Now take the same deal and put more money down. Put down $3,000 and take the $2k "gift" and you'll pay out less interest (1,900) and the car will STILL cost you the around 20k you negotiated for in the first place and you feel all warm and fuzzy that they "gave" you $2k.

1,900 + 15k + the 3k you put down is...tadaaaaa 20k

But put $3,000 down with 0%....and the fuckin car still costs you 20k! Just shut up and buy people!

It all comes down to the numbers in the end. As you can see from the examples above, the difference is negligible for each choice. It's a ploy to get your ass into the seat. Factory rebates or good ol fashion haggling are the way to buy a car. Any financing "deals" are full of shit once you run the numbers.
 
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jmrtsus

jmrtsus

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Thread Starter #13
The way to make this decision is to run the numbers for each specific case.

Say you negotiate the car down to 20k, all in. You put down $1,000 and take a loan for 19k @ 5% for a typical 5 year term. You take the 0% and at the end of that loan you would have SAVED about $2,500 in interest.

The total cost for the car would be interest ($0) + principal + down payment = 19,000 + 1000 = 20,000.

The same deal but this time take the $2k "gift". So now the car is 18k all in. YAY I WIN! You put down the same $1,000 but this time your loan is for 17k @ 5% for the same 5 years. At the end of this scenario you would have PAID out about 2,200 in interest, not saved it!

BFD, the total cost for the car now = 2,200 + 17,000 + 1,000 = 20,200. Only $200 more...! Some gift!

Now take the same deal and put more money down. Put down $3,000 and take the $2k "gift" and you'll pay out less interest (1,900) and the car will STILL cost you the around 20k you negotiated for in the first place and you feel all warm and fuzzy that they "gave" you $2k.

1,900 + 15k + the 3k you put down is...tadaaaaa 20k

But put $3,000 down with 0%....and the fuckin car still costs you 20k! Just shut up and buy people!

It all comes down to the numbers in the end. As you can see from the examples above, the difference is negligible for each choice. It's a ploy to get your ass into the seat. Factory rebates or good ol fashion haggling are the way to buy a car. Any financing "deals" are full of shit once you run the numbers.
I agree, you have to work for a good price and see through all the marketing crap. The bottom line is if you have the credit for the so called 0% you have the credit to get a 3% bank loan probably. So take the $2000 and run to your bank and beat Ford by 2% and get a lower price on the car. Or in our case this week we have $3250 total rebates on the car. Plus very aggressive price discounts said buy now to us. Cars are not selling and even banks are aggressive. Ours said get the dealers and other banks best rate and they will beat it.
 

Dpro

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#14
It all depends on the amount of discounts. I actually outlined this in the previous thread. A lot like what is said above except no one really outlined the mathematic rule of thumb.
If you qualify for 0 down and 0 interested you are looking at a 72 month loan currently from Ford. That is 6 years. Now the big thing people fail to realize about long term loans is the evil little bug called depreciation. It happens loll . When it does on long term loans people discover they owe more than the car is worth andthat they are upside down.
There is nothing wrong though with making a down payment as it can lower the monthly payment rated due to taking a smaller loan. It also can take gap insurance out of the picture.
The flip side of it is should something happen to the car shortly after purchase you stand the chance of losing that money towards roll off depreciation in the terms of a total loss . This also depends on your insurance company as some now have new car replacement policies.

Now on to rebates discounts and negoiations and rules of thumb . The rule of thunb bascially is if your discounts add up to more than you would pay in total interest on a loan you win.
Though rather than looking at things this way dealers tend to steer people towards thinking about monthly payments. Never ever let this happen, this is how the make money on loans. Lower monthly payments translates to longer loan terms unless you make a sizable downpayment. Most people don’t make sizeable down payments.
So I will use my own deal as an example of how you can make it work for you.

My car was$25,125 MSRP, the dealer was giving a just over $400 discount. Ford was offering a 3k rebate,i got a 2k private cash offer. That equaled up to $5400 off MSRP bringing my total down to $19678 with Tri coat paint option $595, Recaro option $1995 and Ebony wheel option $375. The car is a 18 bought in July.

So my financing was not through the dealer it was a 3.8% cap one. I could have probably gone to a cr3dit union and got a 1% lower loan rate but I was going to slam the loan to cut out total interest paid anyways.
On some loans one can do this on some they have requirements that do not let you do this.

That is also another way dealers have insane low sale price ploys. We will sell you the car for 10k off but you have to take our loan for 6% and you can’t refinance it or slam it.

Back to my loan though my total interest if I carried my loan to term would be $1700 based on my 4k put down off the $19678-4000= $15678

So if I did not slam the loan my purchase would have been $19678+1700=$21300 for a car with my options.
Even with the 3k rebate and the dealer dsicount the car would have been $22100 normally. Though because of my slamming the loan I am paying roughly $400 in interest so I still saved a substantial amount.
Especially comsidering my car ws ordered it was not a lot car.

Oh and yes I did qualify for 0% but I would have lost those discounts and had to start negoiating hard to get the price even close to what I got it.

So sum it up if your rebates discounts etc... add up to a decent amount more than interest paid on the loan you take them. If they don’t then negoiate a price and try to get 0% with the caveat of being able to slam the loan and doing that so you don’t catch the upside down value depreciation bug.
 

M-Sport fan

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#15
Way back in March of 2016, when I took Ford's 0% financing, they did NOT offer it in lieu of that $2K discount at all.

NO bank exists around here which was going to give me a 0% interest, ZERO DOWN, 72 month loan, which is the ONLY WAY I could have bought/afforded the monthly payments for this car on my very fixed income, regardless of credit score (which is now well above 800, BTW). [nono] [wink]
 
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jmrtsus

jmrtsus

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Thread Starter #16
Way back in March of 2016, when I took Ford's 0% financing, they did NOT offer it in lieu of that $2K discount at all.

NO bank exists around here which was going to give me a 0% interest, ZERO DOWN, 72 month loan, which is the ONLY WAY I could have bought/afforded the monthly payments for this car on my very fixed income, regardless of credit score (which is now well above 800, BTW). [nono] [wink]
I think my daughter just took the same 0% deal on her new FiST a few weeks ago. All rebates depend on zip codes...here in TN and GA in April of 2016 we had $2K or 0% which worked out to 10% financing on my $20K FiST. Discounts always allowed 100% financing here. I took the rebates and my bank financing, much better deal. Our new Mustang has the $2k or 0% now in FL,TN,GA,and NC. My daughter also got the $2K or 0% on her new FiST a couple of weeks ago in Il. Rebates are always good, so called 0% depends on what it actually costs you to use it. Here we always have to surrender the rebates for the 0% at least since 2016. We bought a 2018 Escape in 2018 and it too was the $2k either or deal in LA. We all have different needs which is what is nice with the rebate/financing deals, options are great! [wrenchin]
 
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#17
The easiest way to save some cash is to shop tax rates. Different cities have different taxes, and some vary a lot. We used to buy from Oregon 1% and deliver to the California boarder about 8%. Unfortunatly they make you pay the tax now in California when you register it. But you can save over 2% just by shopping cities in the state.
 
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jmrtsus

jmrtsus

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Thread Starter #18
New car taxes are normally calculated on the zip code where you register the car not where you buy it. At my location now I have state and county taxes. The next closest zip code is in city limits and has additional taxes and fees. When you buy a car they ask for your DL to get the exact address for taxes. We just bought a new car in Fl (take it home tomorrow) and had a choice of no taxes as the car was not going to be registered in FL, TN taxes or NC taxes as we can claim either. We chose to do it in TN and let the dealer get the tags and title to make it easier for my wife. When I bought my FiST in GA I got the tags and title myself and got out of paying the $800 "doc" fee. Hard to scam the State who provides your tags, County/Parish that supplies title and City fees collected by the county for the city. I have seen this in every state I have registered a new car in which is only three.
 

Dpro

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#19
New car taxes are normally calculated on the zip code where you register the car not where you buy it. At my location now I have state and county taxes. The next closest zip code is in city limits and has additional taxes and fees. When you buy a car they ask for your DL to get the exact address for taxes. We just bought a new car in Fl (take it home tomorrow) and had a choice of no taxes as the car was not going to be registered in FL, TN taxes or NC taxes as we can claim either. We chose to do it in TN and let the dealer get the tags and title to make it easier for my wife. When I bought my FiST in GA I got the tags and title myself and got out of paying the $800 "doc" fee. Hard to scam the State who provides your tags, County/Parish that supplies title and City fees collected by the county for the city. I have seen this in every state I have registered a new car in which is only three.
Ya Here in California its a residence address thing. Whatever is on your drivers license taxes will be applied accordingly. So buying anywhere in the state or out of state does not matter. Not only that but California law is you get taxed on the msrp not the discounted price so I paid about $2400 in taxes on my car and I paid that seperately from my financing and down.

Never ever let them finance your taxes lol. Some people not knowing get caught up in doing that cause they do not realize and take the price with tax and lic.
 

Von

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#20
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

Sent from my Pixel 3 using Tapatalk
 


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