by Sara Weiser, Consumer Education Strategist, PSECUPaying nothing in interest sure seems appealing, especially now. If you’re fielding 0% credit card balance transfer offers or considering a 0% auto loan, be sure to dive deep into the particulars to make sure you don’t end up paying more in the long run. Read on to learn tips for evaluating these offers.Auto Loan FinancingWhen you’re shopping for a car, you have several options for financing. You can get preapproval from a financial institution, like PSECU, before you go to the dealer. Or, you can have the dealer search for financing offers for you. Some of the offers a dealer presents may include financing directly from auto manufacturers. Financing offers from auto manufacturers can seem very competitive. Some require no down payment, offer 0% interest, or have cash rebates.Evaluating 0% Financing from Auto ManufacturersFinancing from auto manufacturers often gives buyers a tough choice to make – you can get 0% financing or take a cash rebate and use financing of your choosing. On the surface, it seems obvious that you’d want the 0% financing. However, depending on the size of the rebate, it may be better for you to choose your own financing from your preferred lender, like PSECU, and pair it with the cash rebate. Consider the examples below for a car purchase that you need $25,000 for (both are 60-month loans). By taking the rebate and combining it with a PSECU loan, you’ll save more than if you take the 0% financing offer from the dealer – both in monthly payments and the total loan repayment amount. The amounts below were calculated using our auto loan calculator. To get an idea of how much a car loan with PSECU might cost you, visit our vehicle calculators page and enter the amount you’re looking to finance and your desired term.With a 0% Auto Manufacturer Loan With a 3.49%1 PSECU Loan and the Rebate
Car price: $25,000 Car price: $25,00
Rebate: $0 Rebate: $4,000
Amount you need to finance: $25,000 Amount you need to finance: $21,000
Interest rate: 0% Interest rate: 3.49
Monthly payment: $416.67 Monthly payment: $381.93
Total loan repayment: $25,000 Total loan repayment: $22,915.80Above example for informational purposes only. Actual terms will vary. See psecu.com/drive for important information.Credit Card Balance Transfer OffersBalance transfers on credit cards allow you to move the money you owe from one credit card to another. Typically, these offers are advantageous if the card you’re transferring the balance to has a lower interest rate than the card you’re moving the balance from. By moving money to a credit card with a lower interest rate, your balance accrues less interest and your payments go further in paying off the actual principal balance on the card.Evaluating 0% Credit Card Balance Transfer OffersIf you receive a 0% interest credit card balance transfer offer, make sure you read the fine print before jumping in. There are many more factors to consider, other than just the initial interest rate.
- Length of offer - Most balance transfer offers expire after a set period of time (either a certain number of months or a specific date).
- Regular interest rate – Once an initial balance transfer rate expires, the remaining balance typically is charged the regular interest rate of the card.
- How much you can pay – If you can’t make more than the minimum payment on the card, you may still be left with a high balance after the balance transfer period expires, leaving you with a big chunk to pay down at the higher interest rate. If the regular interest rate on the new card is higher than the rate on the old card, you may end up losing money in the long run.
- Fees – Many financial institutions offer attractive balance transfer interest rates, but they come with balance transfer fees. These fees may be a set dollar amount or a percentage of the balance you’re transferring and can diminish your savings even more (or make it nonexistent).