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0 Percent Financing

0% Car Financing Ontario is when you can purchase a car and make monthly payments on it without having to pay any interest. As you can imagine, it is a tempting offer that seems too good to be true. Unfortunately, is usually is. There are many pitfalls to 0% financing that you should be made aware. Let’s take a look at a few of them.

0% Financing or Cash Back

This is where you’ll see the dealership offer 0% financing or up to a $10,000 cash back offer. When you crunch the numbers, it turns out that the cash back offer normally saves you money. As of today, Ford.ca offers a 0% financing deal or $7,000 in price adjustments.

Higher Monthly Payments

Because you are not paying interest, the dealerships will give you a shorter repayment period of somewhere between 36 and 48 months. This means that you’ll have much higher monthly payments than you otherwise would with a 60 month loan. If you bought a pre-owned vehicle with a 6.95% loan, you would actually end up paying less for your vehicle than with 0% financing plan.

The most important thing to remember is that, in the end, it comes down to what you can afford to pay per month. Most people will not be able to afford a 0% financing deal and so must opt for a loan. This isn’t a bad thing and shouldn’t be discouraged. Regardless, zero percent financing is a fading trend and may not be around in five more years 1. In 2005, Ford scaled back their 0% financing offers to only the Escape and Focus models and then only for 48 months. At the same time, GM was still offering 0% on most models excluding the Cobalt compact sedan, Corvette, and Hummer H2, but with a 36 month plan. “There is s till a market for zero percent,” says Debroah Silverman, a GM Spokeswoman. “But most buyers are looking for something longer term in a loan. It’s a payment issue.”

In the end, your best option is to first apply for a loan using our online application form, and only once you are approved should you go looking for what car you want to buy. This way, you will know in advance exactly how much you can afford to pay, which removes much of the stress and risk associated with buying a car.