Is 0% Car Financing A Scam? The Shocking Truth!

Have you ever wondered how car companies offer 0% financing? Is it really free, or is there more to the story? In this video, I’ll break down the truth behind 0% financing, subvented rates, and cash vs. finance rebates.
Learn why financing often makes more sense than paying cash, even for wealthy buyers, and how 0% financing can work to your advantage-especially for add-ons and accessories. I’ll also explore two common scenarios: 0% with less discount vs. a bank rate with cash rebates applied.
My name is Baz, and with years of experience in automotive sales and finance, my goal is to make car buying easier and smarter for you. If you’re interested in cars and finance, don’t forget to like, comment, and subscribe for more insights!
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[@marcs4091]

13% tax wt*, where are you registering this vehicle?

[@jackshapiro9875]

Thanks for the information. Very helpful

[@TheBigBazzy]

@jackshapiro9875 Thanks so much. I'm glad I could help.

[@jerrylundegaard2592]

Why take a one year zero percent auto loan at zero percent? It is best to take the longest loan available at zero percent. There is no penalty taking the longest loan period. The borrower may always pay off the loan over a shorter period, including one year, without any penalty on most auto loans.

[@TheBigBazzy]

This is true if it is offered but you still should think about depreciation and the loan amount. The one year is for when there is no 0% option at all and the buyer is paying cash. The dealer can sometimes buy down the rate to make it 0% effectively and offer a 1 year finance to the cash buyer. Its a great option for people who want to keep their cash rebate but still finance it for a short term instead of paying it all at once. I had many cash buyers take this option, most finance managers are not aware that they can do this.

[@jerrylundegaard2592]

@@TheBigBazzy A dealer who buys down the interest rate is going to include the cost to buy down the rate into the deal. The customer will pay that cost as a higher selling price or through some other dealer pricing shenanigans. Depending on the amount of the cash rebate this may or may not be a good option for the car buyer.

[@TheBigBazzy]

The rate buy down comes from the reserve that the lender pays to the dealer for financing a car with them. It has nothing to do with the price when I would do this. As a finance manager I would rather give up some of the reserve to buy down the rate to make it 0% for the customer rather than making nothing on a cash deal. It's a win win for everyone. The customer still gets the cash rebate and finances for 1 year with no interest.

[@jerrylundegaard2592]

@@TheBigBazzy The single most onerous scam played by a car dealer on a car buyer is, arguably, dealer reserve. Dealer reserve is when the F&I manager, always the dealer's top sales person, bumps the interest rate over the buy rate authorized by the financing company. No dealer reserve is sufficient to enable a car dealer to buy down an interest rate from a financing company used by that dealer to zero percent. The only legitimate zero percent rates are offered by the captive lender as an incentive to move inventory. A F&I manager might be able to buy down a rate to a small degree, provided that does not turn the overall deal into a negative for the dealer. That might have been possible when interest rates were under 2 percent. But in today's financing environment, that is not a thing car dealers would be willing to do. If a dealer offers a non captive rate of zero percent, that dealer has raised the selling price in some manner to compensate for the money provided to the lender. Any zero percent financing not provided by the captive is simply a scam. Regardless, why would a car buyer need to take financing from the dealer to gain the cash incentive? Just take the captive financing and the cash incentive and pay off the loan within the next month. No captive lender has a pre-payment penalty.