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Question RE: Buying a car

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  • Question RE: Buying a car

    There is this commercial i've been seeing on TV... a local car dealership is offerring NO downpayment, NO interest til 2004, and NO payments til February, 2004. this is on 2002 leftovers, and all new 2003's except for two models.

    i've heard of the deferred payments before, but not *zero down* along with it. what pitfalls should i look for... huge interest charges once the payments kick in??
    "You did what you knew how to do...and when you knew better, you did better." ~~Maya Angelou

  • #2
    Off top of my head, I'd wager that if you get financing through them, that it'll be for a reduced period ... i.e, 36 months instead of 60.

    My parents were considering buying a new car last fall when so many dealerships were offering 0% financing ... hitch was, they would only offer 24 month payment plans.

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    • #3
      Yeah, watch out for that huge ballon payment at the end.
      There's a fine line between fishing and standing on the shore like an idiot.

      Steven Wright

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      • #4
        My favorite is watching the news on the Spanish Channel. I can't understand what they're saying, but that doesnt really matter.........

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        • #5
          crap.....I thought I was still on the CNN broadcast Topic! oh well. I still like the spanish channel.........

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          • #6
            No interest or payments until 2004......... then, if you haven't paid it off by then, you'll pay interest on it back to the date of the loan origination.

            No downpayment simply means you'll be financing more, which will be more they can charge interest on.

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            • #7
              I may be repeating what others have said, but these are the pitfalls with such special deals:

              1. It only covers certain models/years, as you've already discovered.
              2. You MUST take delivery from dealer stock, so you might get stuck with a color you don't particularly care for, or do without the options you really wanted.
              3. Such special deals are often for "well qualified" customers. "Well qualified" will vary from manufacturer to manufacturer, or dealer to dealer, and often times they won't disclose what their credit requirements are (usually along the lines of your credit score) without making a deal.
              4. If not paid off during the deferment period, you may owe the back interest accrued during that time.
              5. You will be "upside down" (owe more than the car is worth) for a longer time. Remember your car will be a year old before you even start to pay down the loan. If the car is stolen and rendered unrecoverable, or totalled in an accident, during the first few years of ownership this could cause quite a problem. You may be forced to pay off any outstanding loan amounts above and beyond what the insurance company will give you for the car.

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              • #8
                JB,

                Another thing to be careful of with "no interest" arrangements...

                If you make your payments late, the interest will be assessed. One deal I looked at assessed a 9% rate, and if I'd made the LAST payment late, all the interest based on a 9% APR loan would have been due. This would make a $4000 difference in what I'd pay on the truck I wanted.

                Read the fine print!! If you have a lawyer in the family, get them to decode it for you.
                "But if it be a sin to covet honor, I am the most offending soul alive." from Henry V, by Wm. Shakespeare

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                • #9
                  DO NOT let your wife and daughter go car shopping together!

                  BTDT yesterday. MY wallet is $500 THINNER and my insurance premiums are SURE to go up.......but they DID get rid of a potential 'problem' auto and there IS something to be said for 'peace of mind'. Especially when it concerns loved ones driving on the highways ALONE.

                  FWIW, my wife traded her '98 Mustang for a 2003 Escape for my daughter, and took my daughter's 2001 Mustang. My daughter sustained a sports injury last year that made bending over to get in/out of her car very painful....and my wife's arthritis made shifting a 5-speed painful.

                  So....THEY are happy and I'm 'out' $500. LOL

                  [ 11-29-2002, 08:37 PM: Message edited by: shooter1201 ]
                  "When you guys get home and face an anti-war protester, look him in the eyes and shake his hand. Then, wink at his girlfriend, because she knows she's dating a *****."
                  -Commanding General, 1st Marine Division

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                  • #10
                    Thanks for the info. i dont have a lawyer in the family. i dread going car shopping alone so i'm going to try to recruit a big, mean-looking guy to go with me

                    I am in reasonably desperate need of a new car, that's why this deal appealed to me. i dont have much i can spare for a downpayment, and i know i will have more money come 2004. i'm not sure what i'm going to do, but if my car does not make it thru winter, i will wish i did SOMEthing.
                    "You did what you knew how to do...and when you knew better, you did better." ~~Maya Angelou

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                    • #11
                      There's still a lot of good deals out there. Automakers are trying to rev up sales in a year where nobody wants to make large purchases.

                      The low-interest financing can be a good deal, as long as you know what the fine print is. If you can get it for the entire 5 year period, great.

                      I do recommend steering away from the "no payments for x number of months" deal. It'll just keep you in debt for that much longer.

                      If your car is on its last legs, and you don't have a lot of cash, you may have to settle for a cheaper model, or a used model, just to get you by until your finances improve.

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                      • #12
                        Thanks Sig, yeah i need to face reality LOL.

                        I worry about getting a used car and having it break down or have problems that I then cant afford to fix! i'm going to skip this deal for now as i dont really want a Mitsubishi.
                        "You did what you knew how to do...and when you knew better, you did better." ~~Maya Angelou

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                        • #13
                          JB,

                          If you're worried about the reliability of a used car, try going with one of the "certified" versions. These have gone through a rigorous inspection by a factory-trained tech ("rigorous" of course will vary by manufacturer), but most importantly it will carry a factory-backed warranty that is honored at any of the dealerships for that brand.

                          Once exclusively the domain of high-end brands like Mercedes, BMW, Lexus, etc., now you can find them on more mainstream brands like Toyota, Honda, etc. Such cars tend to be 3-5 years old, and are most often lease returns, so they tend to be in really good condition.

                          The prices will of course be higher than with a private party, or sometimes even a dealer, though still less than new. But, because of the financing specials on new cars, right now there is a big glut on used cars, so you can get a good deal on the price, if not necessarily the financing.

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