Automotive Financing Options

First let’s look at what options we get, the salesman tell us that we can opt to get 0% financing or take the $4,000 rebate. What should we do? There are really one question we need to ask ourselves before we decide which one we want to take.  1st are we going to keep this car for the life of the financing? In other words if we’re are getting a 72 month loan for this car are we going to be keeping it that long? Most people say, "I'm going to keep this car until the wheels fall off", Yea right. In fact most Americans trade out of their car within the first three years. With that being said the best option would be to take the money up front! Why? A good friend of mine told me of an old trick banks and dealerships use to do when they were going to finance a car. They would charge the interest rate upfront, and tack it on to the car note. So if you financed a car for $25,000 at 10% interest, they then added the interest to the note making it roughly about $33,000. Pretty crappy deal hu? Since if you paid you paid first on the interest and not on the principal. Thank God the law changed. Today they add the interest daily. So the faster you pay the more you save.  This is why you should always take the rebate. if you buy a car for $10,000 and take the 0% financing option instead of the $2,000 rebate, when you drive off that dealers lot you still owe $10,000 but guess what? Your car is only worth $8,000 because of deprecation. Well let’s take that one step further. Two years down the line you decided that the Mazda 3 was too small for your family and you want to trade it in. Well guess what you have only paid 2 years on that car which barley touched the principal balance, and you owe $9,700 on your car but its only worth $6,500 so now you have negative equity. Get the picture?? The more money you can save upfront the better because you never know if you’re going to sell your car, be in a wreck, or need a bigger car.