Disadvantages of Auto Loans with Zero Percent Financing

Interest rates are one thing which almost every borrower hates to pay. In cases like these, if one comes to know about a company which is giving auto loans with zero percent rates, then almost everyone would love to get the car that that company gives. However, one might wonder as to why a company is providing the loan with zero percent rates as the interest is how they earn their profits. There are several disadvantages (which can occur) when one goes for auto loans with no interest and these are mentioned below:

One of the major disadvantages is that the company might provide only one or two models of their cars on zero percent financing. If this car isn’t liked by the borrower, then he/she would have to go for the car which is financed with interest.

Usually, the loan term in zero percent financing is too short. One can easily calculate the amount he/she would have to pay in three years whereas the same amount (plus interest) can be easily spanned out in a time of six years.

In cases of zero interest rates, there are chances that the dealer might not agree for negotiating on the car price. There is a certain percentage of profit for manufacturer and the dealer and many people try to negotiate the price so that they can buy a car for less. If the dealer doesn’t agree on negotiations, then it is best to go for some other offer. If one still wishes to finance the car, then it is best to get it done from some other dealer/lender.


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