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Student loan consolidation tips #how #to #apply #for #student #loans

#school loan consolidation

Student loan consolidation tips

If you have several student loans, you may be thinking about finding a way to consolidate them into one or two more manageable monthly payments. In the past, we have talked about considerations around consolidation. Here are a few more things to evaluate before you start down the consolidation path:

Private and Federal student loans do not mix. If you have federal and private student loans, realize that you may not want to consolidate them together (or may not be allowed to by some lenders). They can be consolidated separately with Federal Direct Loan consolidation and private student loan consolidation. Federal student loans offer a variety of repayment options which you may not want to give up, while private student loans may offer better interest rates, if you (or your cosigner) have a good credit history.

Two people can consolidate their private student loans into one loan. Any two individuals whose finances are bound together—spouses, domestic partners, or even family—may find it convenient to simplify their loan payments. As the new loan cannot be un-consolidated, though, this is not an option to be taken lightly.

Private consolidation requires a new credit review. A loan consolidation actually opens one brand new loan which pays off your existing loans, so you have all new terms, conditions and—of course—you have to qualify for that lump-sum amount. If you have not built up much of a credit history yet, you may still need a cosigner on your consolidation loan. However, keep in mind that some lenders may offer a “cosigner release” option if you qualify. At Wells Fargo, we also have “borrower benefit” criteria: if the consolidation does not provide some real benefit to the borrower (such as an interest rate reduction or a lower monthly payment), then we will let you know that consolidation isn’t available to you.

Student loan consolidation can be a great tool to simplify your finances, but it is not right for everyone. Evaluate your situation carefully, ask questions, and share your consolidation stories with us. Did you consolidate your loans? What were the benefits to you? Is there anything you would have liked to have known?

Best College Loan Advice: 9 Tips for Borrowing for College – CBS News #montel #williams #loans

#loans for college

Best College Loan Advice: 9 Tips for Borrowing for College

  • Lynn O’Shaughnessy
  • MoneyWatch

Last Updated Apr 13, 2010 4:15 PM EDT

College loans . Yes, that time has arrived when parents of returning and new college students start thinking about applying for college loans. It’s also crunch time for graduating college students, who must begin repaying their college loans .

Unfortunately, many families get into trouble when they start shopping for college loans . When the college admission process is over, many parents are so relieved that they fail to do their homework before choosing college loans. College graduates also don’t give much thought to how they will tackle their college debt.

To help out families, who must borrow to pay the college, I’ve assembled some of my past college blog posts on student loans. Some of the posts will help you pick the best college loans and others will help those who must soon begin repaying their student loans.

There is no one right answer, but you will find links in this post to calculators that can help parents determine what level of college debt they can handle.

Students should limit their borrowing to federal loans only, which are safer and offer more protections than private student loans.

Federal loans are your best bet, but unfortunately many families gravitate to private loans because they don’t understand the difference.

In the early 1990s, only one out of every three college students took out college loans, but now well over half do.

There are federal student loan repayment opportunities that can dramatically shrink the monthly tab of eligible borrowers.

Don’t attend a college that has a high student loan default rate. Here’s how to find those default rates.

If you are struggling as you attempt to repay your student loans, here are some options.

Be extra careful about repaying student loans on time. The penalties can be astronomical.

Car Loan Tips #instant #payday #loans #uk

#interest rates on car loans

Car Loan Tips

How to Avoid a Higher Interest Rate in Your Next Car Loan

Buying a car can be a daunting and intimidating task with tricks and traps at every turn. Car buyers often spend countless hours researching the best vehicles, comparing key features, and ultimately finding the best deals. But when it comes to financing their new vehicle, car buyers are often left in the dark as to what constitutes a good car loan and what abusive practices to avoid.

Run Your Credit Report

Before embarking in your car buying journey, request your credit report from the three credit bureaus. You can request your credit report for free once a year by visiting or by calling 1-877-322-8228. Your credit report will give you a glimpse of your creditworthiness and inform you of any possible shortcomings. Knowing of all this before stepping into a dealership will guard you from the most aggressive selling tactics and help you walk away when the financing offered is not in your best interest.

Visit Your Nearest Bank or Credit Union To Get A Quote

Negotiate for a Better Rate

Other Things to Consider:

Comparison Shop Online: The internet has made it a lot easier for consumers to compare car prices and loan rates online. Start your research there before you head out to the dealership.

Yo-Yo scams: Yo-yo scams or spot deliveries occur when a car buyer drives away with the vehicle without finalizing sale. Once home, the dealer will call back the buyer claiming that it was unable to fund the loan at the agreed-upon terms. The buyer must then return the car to the dealer and often renegotiate the loan at a higher interest rate than one agreed-upon before.

Buy Here and Pay Here Dealers: Buy Here Pay Here dealerships typically finance used auto loans in-house to borrowers with no or poor credit. The average APR is usually much higher than a bank or credit union loan. The car loans made by these dealers are often unsustainable and lead to a high rate of repossessions.

Take Your Time: The average consumer spends 45 minutes with the finance and insurance department at the dealer (only 27 minutes if they take a test drive), so take your time to consider your lending options and don t feel pressured to sign the dotted line. You have the right to take the entire paperwork home before agreeing to the loan.

Don t Get Caught In The Monthly Payment Trap: Dealers will often attempt to mask the true cost of their loans by focusing on the monthly payments. Be sure to compare the total cost of all the loans offered and to choose the one that is less costly to you in the long run.

3 Tips to Get Guaranteed Private Student Loans with Bad Credit. #loan #calculator #auto

#guaranteed student loans

3 Tips to Get Guaranteed Private Student Loans with Bad Credit

Guaranteed private student loans are less expensive than loans without a guaranty. A guaranty is simply a promise from another organization, typically the federal government, to purchase the loan from a lender if you default. Most loan guarantees are given to creditworthy applicants only. However, if you have bad credit, there are a few options that may still make you eligible for a guaranty, despite your poor financial record.

#1 Provide Written Explanation

Whenever you have bad credit, it is important to point to a specific cause of that negative report. Simply mismanaging your finances will not be a good reason for a future lender to trust you. Alternately, if you have had an illness or emergency, a lender may be sympathetic to the causes of missed payments in the past. For many students, the cause of low credit is a short credit history instead of missed payments. You can explain these circumstances to a lender with a short written explanation. Submitting this along with your loan application will show a lender you are aware of the issue and have taken steps to correct it. Above all, the lender wants to see you are no longer under the pressures that caused you to previously miss payments on your credit history. Once a private lender accepts your loan, then you can submit the same documents to a service that will guaranty your loan.

#2 Seek Need Based Loans

The federal government does give need based loans to students who are economically disadvantaged. Even with these loans, though, the borrower should show he or she is creditworthy. Since the loans are going to needy people, the government may be more understanding of issues that result from economic disadvantages. Be sure to highlight your disadvantages in your application. You can have a private loan guaranteed by the government based on your need, just as easily as your credit score.

The basic criteria for any loan guaranty are that you are able to locate a private lender to fund your loan. In order to do so with bad credit, you may need to get creative with your loan application. Using collateral, like a savings account or hard asset, may provide a lender more confidence in your ability to pay the loan. You can also borrow the good credit of a close associate or relative by using him or her as a cosigner. Again, you will need to apply separately for the loan guaranty and meet the qualifications of the guaranteeing institution. However, the same rules generally apply here as do with a private loan: provide assurance against default and credit becomes less important.

Top 3 VA Home Loan Tips #student #loans

#best home loan

Top 3 VA Home Loan Tips

There are numerous advantages to having a VA mortgage. A VA mortgage loan can be guaranteed with no money down, in some cases up to $417,000. There is also no private mortgage insurance requirement with a VA guaranteed loan, which could offer you substantial savings on your monthly payment. You can even use your VA Loan benefit to refinance an existing loan — even if it is not a VA Loan.

Be sure to ask for information about the interest rate reduction loan. This program adjusts an adjustable-rate mortgage to a fixed-rate loan, which is part of the Streamline Refinancing Program, which allows you to refinance at little or no expense to them.

We’ve scoured the Internet to find useful tips for our members to help prepare to take advantage of this exclusive benefit. The following is a collection of useful, concise tips regarding the Veterans Administration Home Loan.

Tip #1: Check Your Credit First

Did you know that over 70 percent of all credit reports in the United States contain errors? Your lender will be looking at your credit report and making important decisions based on the information that is contained within — decisions that could make a big difference in the bottom-line.

Because lenders use complicated scoring formulas to determine how much you can borrow and at what rate it would be a good idea for you to check your credit report for any inaccuracies. Make sure you obtain a report that gives you information from all three major credit bureaus, as each may be different.

What may seem minor to you might not to a lender. Contact the credit bureaus to correct any mistakes. This could result in substantial savings on the cost of your loan.

Download a free VA Loan Guide to learn more about this exclusive (veterans and military only) benefit

Before you start the hunt for a house, the best thing you can do is to get pre-approved for your VA loan amount. The time you save quite literally will be your own. Once you have determined the loan amount you are approved for, you can start house hunting with confidence. In a tight housing market it will also give you a heads up with the seller, as other potential buyers may not have taken this important step.

Knowing in advance what you are able to afford offers a great deal of security. That kind of security will go a long way as you search for the best value for your money. Having a VA mortgage is an excellent benefit, but finding the right home is just as important. With pre-approval, you avoid wasting time with homes out of your price range or sellers who are unsure whether you are a serious buyer.

Tip #3: Choose Wisely – Fixed or Adjustable Rate Loan?

Chances are you will be looking for your VA guaranteed loan in the same places people go to get non-VA home loans or conventional loans. It always pays to shop around, which is why we match you with up to three lenders at You can choose to get a fixed rate loan, which you’ll negotiate with the lender, but don?t discount the possibility of a VA adjustable rate mortgage (ARM).

The interest on an ARM may be adjusted one percent annually, and up to five percent over the duration of the loan period. So should you go with a Fixed rate or adjustable? It really depends on the buyer: In a rising rate environment a fixed rate loan can offer some piece of mind but for those who might not be planning in staying in their home more than a few year, and ARM can offer significant savings now. The best advice is to do your homework, find the most competitive rate and don’t take the first offer you get. That is a mistake often made by first time homebuyers who are excited getting into a house. The time you spend now will yield results for years to come.

Next Step: Download a free VA Loan Guide today, to learn more about this exclusive (veterans and military only) benefit

Tips On Refinancing a Mobile Home Loan #3 #month #loans

#manufactured home loans

Refinancing mobile home loan at lower rate

Buying a mobile home, also known as a manufactured home, can be one of the most affordable ways to own.

One decision can make a significant difference in monthly payments: whether to finance the mobile home with a personal property loan or a mortgage.

Personal property loans, known as chattel loans, have much higher interest rates than mortgages. To some owners of manufactured homes, refinancing chattel loans into mortgages could reduce monthly housing expenses.

Refinancing a mobile home

To qualify for refinancing as a mortgage:

  • The home must be on a permanent foundation that meets standards set by the Department of Housing and Urban Development.
  • The manufactured home must be titled as real estate rather than as personal property.
  • The homeowner has to own the land that the manufactured home is on. An important exception to this rule is explained below.

Big difference in interest rates

In 2012, about 68 percent of all manufactured-housing purchase loans were considered higher-priced mortgage loans, and many of them were chattel loans, according to the Consumer Financial Protection Bureau.

More On Refinancing:


Interest rates on chattel loans range from 7 percent to 12.75 percent, says Ken Rishel, founder of Rishel Consulting Group in Chicago. The loans are usually for 15 or 20 years.

In contrast, the average rate for a 30-year fixed-rate loan has been well below 5 percent for all of 2014.

Rishel, whose company makes chattel loans of at least $5,000, says the interest rates are risk-based, and chattel loans are often the only choice for borrowers with poor credit. Chattel loans are the main option for owners whose mobile homes are not permanent foundations.

Converting to a new title

Some states have eased the process of converting a personal property title into a real estate title, making refinancing possible, says Marc J. Lifset, an attorney with McGlinchey Stafford in Albany, New York.

Lifset helped financial institutions lobby for the approval of that legislation in Alaska, Illinois, Iowa, Louisiana, Maryland, Missouri, Nebraska, North Dakota, Tennessee and Virginia.

“The legislation provides a clear definition of when the home is real estate and when it is not,” he says. “It makes the process more certain. In many states, the definition was murky.”

Getting a real estate title

A real estate attorney or title company can help with a title conversion as a first step to refinance. Owners of manufactured homes need to provide:

  • A certificate of title to the home or a copy of the manufactured certificate of origin.
  • The deed to the land where the home with the permanent foundation is located.

Once the owner has the real estate title in hand, the next step is to find lenders that provide mortgages on manufactured homes. The rest of the process is similar to closing a mortgage on any residential property.

Borrowing on leased land

Under some circumstances, owners of manufactured homes leasing a lot at a mobile home community can get mortgages — even if they don’t own the land beneath their feet.

The Federal Housing Administration offers a program known as Title I, designed for owners whose mobile homes are on a permanent foundation but are within a manufactured housing community.

Among the requirements for a Title 1 mortgage:

  • The mobile home must be the borrower’s primary residence.
  • The home has to be on a rental site in a manufactured home park that conforms to FHA guidelines.
  • The lease agreement must meet FHA standards.

It’s not easy to find mobile home communities that meet the FHA’s strict guidelines, says Rishel, whose company makes chattel loans in land-lease communities. “Not many landlords participate on the Title I program.”

Few lenders offer Title I mortgages. One is 21st Mortgage, which is owned by Clayton Homes, one of the nation’s largest manufacturers of mobile homes.

Costs of switching title

When a mobile home is titled as personal property, the owner pays personal property taxes. When it’s titled as real estate, the owner pays real estate taxes. In many states, property taxes tend to be higher.

“The consumer has to do the math on how much they are going to save by lower interest rates, compared to how much more taxes they may be paying and what the closing costs are going to be” in a refinancing, Lifset says.

Another potential downside: If the owner has to build a permanent foundation to refinance a chattel loan, that expense has to be taken into account. Building a new foundation could cost $10,000 to $15,000, Rishel says.

“Refinancing is a valuable thing but for a limited number of people who live in manufactured homes,” he says.

Refinance Car Loan Tips and Tricks #payday #loans #no #credit #check

#refinance auto loan

Refinance Car Loan Tips and Tricks

A refinance car loan is an effective way of saving money. A lot of people pay high interest rates on their car loans and overlook the benefits of auto refinancing. It helps you focus on repaying the principal of the loan rather than paying a lot of money on the interest. Even though refinancing your car loan is a straightforward process, you need do your homework and evaluate your credit score.

See what kind of interest rates you can get

Choose the Right Auto Loan Lender

Your first step in refinancing your car loan should be to find an auto loan lender who offers a low Annual Percentage Rate (APR). Research lenders and see what they have to offer. Consult your friends who have had an experience in auto refinancing. Ask them to the good and bad points about their auto lender company and be sure to ask them how much they lowered their car payment and how much they ultimately saved with auto loan refinance.

Since most refinancing companies have their own calculator, it is advisable to shop around and check which company provides the lowest interest rate. You can determine which company has a lower interest based on the monthly payment it estimates you need to pay. Check at least three different companies before settling on one.

Get started by finding your refinancing rates now

Run a Credit Check

Before you refinance your auto loan, it is best to run a credit check to determine your current credit standing. As with any financing application, you need to know whether you have a bad credit history, since this may determine the interest rate for the refinance auto loan. There are several accredited websites where you can check your credit report or history.

Do Not Apply for a Refinance Car Loan If Your Credit Score Is Below 600

If your credit score is not impressive, you will not gain maximum benefits from refinancing. Interest rates are determined by your credit score. If you have a good credit score, it is likely that you will get a lower interest rate. You should have a good credit history before you apply for refinancing. Consulting a credit repair company to improving your credit score will prove helpful. It is a myth that your credit score drops if you run your credit report online. It is common for auto dealers to use your ignorance about your credit history to charge you higher interest rates.

Consider Auto Loan Refinancing Even If the APR on Your Car Loan Is Low

Utah Home Insurance Quotes #utah #home #insurance, #utah #home #insurance #tips, #utah #home #insurance #information, #utah #home #insurance #quotes, #compare #utah #home #insurance #quotes, #utah #home #insurance #quote


Get a Better Deal with Utah Home Insurance Quotes

While much of the Beehive State is rather sparsely populated, there are still plenty of spots for people to call home in Utah. Homeowners insurance is, of course, one of the many expenses that comes with owning your house, and though it is not required by law, lenders and most property owners deem it a necessary precaution. Utah home insurance is significantly low in cost when compared to rates in other states, but its status as the fastest growing state in the nation could indicate that Utah home insurance premiums may see a rise in the not-so-distant future. Though it is highly unlikely that residents will see rates like those found in New York, California, or Louisiana any time soon, Utah homeowners insurance quotes are of great benefit for both present homeowners, as well as those who will purchase a home in the coming years.

Why Utah Home Insurance Quotes Are So Beneficial

Whether you’ve had your policy for decades or you’re looking to buy your first policy ever, much can be gleaned by examining home insurance quotes. Utah is pretty affordable when it comes to insuring your house (according to the National Association of Insurance Commissioners, Utah’s annual average expenditure is $494, making it well below the national average of $804). However, just because the statewide rates for home insurance are relatively low doesn’t necessarily mean that you are automatically going to get a great deal with every insurance provider.

For folks in Utah, home insurance quotes are likely to vary from company to company; though this variation is often small to modest, in some cases, one insurance provider may offer the same amount of coverage as another for hundreds less each year. Getting quotes is the most effective way to show you what the competition is offering, and since the competition can sometimes save you a significant amount of money, it is difficult to dismiss the benefits of periodically getting a few quotes from other companies.

Other Ways to Save on Utah Home Insurance

Of course, changing insurance providers is not the only way to lower your yearly homeowners insurance costs. Many folks who find their insurance rates are too large to fit their budgets can lower bills by increasing deductibles, lowering limits, or eliminating certain types of coverage from their policies. Each of these is an effective way to reduce your yearly insurance bills, but none is without its drawbacks. Increasing your deductible means that, when your home is damaged, you’ll have to pay more out of pocket before your insurance even starts to kick in. Lowering your limits means that your provider may not cover all of your repair or replacement costs, leaving you to make up the difference. Eliminating certain types of coverage may be a good option in some cases, but as the 1999 Salt Lake City tornado taught many a homeowner: you just never know when or how damage to your home might occur.

Utah Home Insurance Discounts

In addition to changing providers and altering your existing policy, Utah home insurance providers offer another way to save money on your premiums: Discounts. Installing a monitored alarm system, upgrading old wiring and plumbing, increasing your credit score, remaining claim-free for several years, and taking out multiple policies with the same provider are just a few of the things that many insurance companies offer discounts for. Of course, not everyone is eligible for discounts, and as making yourself eligible for discounts often costs money up front, the investment may be out of reach for some homeowners in Utah. Homeowners insurance quotes are free to anyone, and the fact that they may offer significant savings without any kind of monetary investment makes them one of the most affordable (as well as effective) tools around for lowering your rates. NetQuote offers a simple and convenient route to finding Utah insurance quotes. Are you paying too much? Let us help you answer that question.

Automotive Tools Tips Advice – Kelley Blue Book #best #bank #loans

#car loan

Upside-down on a Loan?


It is common knowledge among automotive salespeople that roughly two-thirds, more or less, of all new-car buyers who walk into a dealer’s showroom have a current car to trade in, and roughly two-thirds of those, more or less, owe more on that existing vehicle than its trade-in value. If you owe more on something than it’s worth, in the terminology of the industry that is known as being “upside-down,” and it applies to roughly half of all new-car buyers. This didn’t used to be so common, as there was a time when a prudent buyer tended to purchase a car and diligently pay it off. But, with incentives on the rise, low-interest, long-term loans dominating the financial landscape and increasing numbers of buyers over-extending themselves by seeking instant automotive gratification, more people are finding themselves in the situation of owing more on the vehicle loan than the car is worth.

In a market that pushes the newest, latest car designs, many people feel they have to get into a new car — whatever it takes. Others simply don’t feel comfortable driving a car that is out of warranty or has a lot of miles on the odometer. Whatever the reason, the fact remains that dealers and financial organizations are willing to accommodate these purchases by making deals that roll-over the debt owed from the trade-in and add it to the financing for the new car with, understandably, a higher loan amount over a longer period of time. This is done to keep the monthly payment low enough to be affordable. What sometimes doesn’t get noticed by the buyer is that he or she is now making payments on two cars — the new one and what was left of the old one — and taking a very long time to pay it all off.

Furthermore, when a buyer is described as being upside-down it is quite often not for just a few thousand dollars. Many buyers are upside-down by 10 or 20 thousand dollars, or even more and, at their current rates, it will be years before they are even.

Why is this so common?

The combination of hefty incentives, smaller down payments and the general willingness on both financial and dealer organizations’ parts to create roll-over loans has influenced the market to accommodate lenders’ needs and find creative solutions to getting buyers into new vehicles. Some of these methods are less desirable than others but, ultimately, it’s a personal financial decision a car buyer must make before taking the plunge. And, in truth, the real reason many people are so far upside-down is because they were too eager to get a new car and didn’t consider the financial consequences. When a buyer is heavily upside-down, it didn’t happen by accident.

Understand Your Position

Don’t know if you’re in this situation? To find out, simply look up the trade-in value of your current vehicle — be sure to rate your vehicle’s condition by selecting the “Rate It” link on the pricing pages. If your trade-in value is less than the balance of your current car loan, you are upside-down by that amount; if you were to trade in that car on the new car, you would still have to give the dealership the additional money just to come out even on the trade. Check out your car’s private party amount. Is it still less than your debt? If not, you may want to try selling it yourself.

Understand Your Options

If you find yourself in this position, you have several options — each with benefits and risks attached:

Option 1: Roll-over the existing debt to a new car loan


The biggest benefit to choosing this option is that you will be able to drive that new car off the lot, possibly for a comparable monthly payment.



You will probably be asked to finance a long-term loan, which means you will owe a lot more than the new car is worth, and is going to be worth, for an even longer period of time.

Option 2: Find a new car with an incentive amount that covers your debt


This finance trick is great for covering the amount of your trade-in debt and will eliminate the roll-over effect.


Remember that with most incentivized vehicles the resale value is taken out of the car up-front. In other words, you’ll find these cars’ values drop faster than other cars that do not have incentives, thus placing you in another upside-down position later. NOTE: This is still less risky than Option 1 because, in this case, the manufacturer has absorbed part or all of the negative balance.

Option 3: Keep the car you have until its value catches up


The obvious benefit here is that you will have equity to work with when you’re ready to look for a new car. Generally, this is the wisest financial choice and, taken to its logical conclusion, it will get you back on top of things. But it doesn’t satisfy many buyers’ desires for instant automotive gratification.


The only risk is that your car could have excessive miles and damage, reducing the amount you have to barter with. But, if you can live with it for a while and pay it off, you will eventually be back in a much better financial position.

Option 4: Refinance your existing car with a shorter-term loan


Third-party financial companies, like  LightStream, an online lending division of SunTrust Bank. offer refinancing loans that could speed up the time it takes to get your loan healthy.


You risk missing out on getting those new wheels, of course, but you may also find yourself outside your current car’s warranty coverage and accumulating a lot of miles on it. And, to restructure in this way will almost certainly mean your monthly payments will increase — after all, you’re refinancing the remaining portion of an existing loan over a shorter time period.

As you can see, both consumers and dealers are coming up with highly creative ways to deal with this growing issue. The biggest danger is that rising interest rates — even increases as small as one percent — could equate to an increase of several hundred, or even a few thousand dollars over the life of the loan. With some loans being financed for terms as long as 96 months (eight years), the effect of rising interest rates and the practice of rolling-over an existing loan into a new one could result in an unfortunate situation that would negatively affect your personal financial health. And all for a new car.

Avoid Being Upside-Down Again

Finally, here is some general advice on things you could do before you pursue your next car purchase:

  • Educate yourself on your credit score don’t pay a higher interest rate than you need to.
  • Educate yourself on available interest rates in the marketplace before applying for a loan; know a good rate when you see one.
  • Do plenty of pricing research on available new car and trade-in values to get a good value on both transactions.
  • Match your loan to your expected ownership length of time; a longer loan will help keep monthly payments low, but chances are it will lead to being upside-down when the time comes to trade in for yet another new car.

Automotive Tools Tips Advice – Kelley Blue Book #litton #loan #servicing

#no interest loans

Zero-Percent Financing: Financial Fact or Fiction?


When you hear or see ads touting zero-percent financing, your first reaction may be one of skepticism. How can any finance company offer a car loan with no interest? Yet, zero-percent financing is currently one of the most popular incentives in the automotive industry, and it is offered by the finance arms of major automotive manufacturers.

Just as they offer vehicles with cash rebates, car companies subsidize the finance arms of their corporations, essentially pre-paying the loan interest on specific models. Each company follows the individual formula that works best for it depending upon the cost of the vehicle and the loan term.

The automotive industry on the whole has been on a downward sales trend since before the events of 9/11 and, since that time, zero-percent financing has been offered on more brands than ever.

Does zero-percent financing work? In large part, yes. According to the J.D. Power Dealer Finance Study, it is considered to be one of the most successful motivators to get car buyers into dealerships. Another side of the issue is that while the enticement of zero-percent financing brings many car buyers into the dealerships, those buyers may not necessarily end up with the zero-percent loan — for a variety of reasons, which we’ll explore.

When it comes to zero-percent financing, what is fact and what is fiction?

  1. Zero-percent financing usually requires a shorter-term loan, which can require higher payments.

The most common zero-percent finance deals tend not to extend for as long as the conventional auto loans, so many buyers may opt for the conventional loans in order to keep the monthly payments lower — even though they will end up paying a lot more money in the long term. There are, however, exceptions to this rule, in which zero-percent financing may be offered in longer terms.

  • Zero-percent financing requires unblemished credit to qualify.
    Not necessarily, as some finance programs are moving to go after an expanded audience of buyers with less than perfect credit scores.
  • Zero-percent financing is available only on a limited number of models in dealer stock — not on special orders or certain option packages.
    Most zero-percent deals tend to apply only to the vehicles on the dealer lot and they may not include special option packages or premium models.
  • Zero-percent financing is usually offered in an either/or situation with a cash rebate and you must choose between the two.
    Most of the programs typically follow this formula.
  • If you qualify for zero-percent financing, negotiating a lower price on the vehicle may be more challenging.
    Although this may happen, a reputable dealership will be open to negotiating the deal before applying the zero-percent financing to your sale. As always, we recommend you do your homework before buying.
  • Even if you do not qualify for zero-percent financing, excellent interest rates are available.

    An online lender such as LightStream, an online lending division of SunTrust Bank. can, in many cases, get you a lower interest rate than a dealer might offer. For this reason, we recommend shopping loans online to make the best possible choice before you go to the dealership.

  • With all these facts in mind, many people will be attracted to zero-percent financing. Although this trend has been around for a couple of years, most industry experts believe it can’t last forever. With the advent of lower interest rates and flexible terms, today’s car buyers are finding creative financing options at an all-time high. And, with the economic challenges facing many car buyers, these programs will continue to bring buyers into dealerships.