Key Points:
- Seek 0% financing on less popular car models to save on interest.
- Compare rates from car companies, banks, and credit unions.
- Total cost savings: 0% vs. higher rates can save thousands over time.
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Douglas and Lee discuss the rising interest rates for car loans and offer advice on how to shop smartly for the best deals. They suggest looking for cars that aren’t selling well, as they often come with attractive financing options, such as 0% interest for 72 months. They highlight specific examples like Subaru’s Solterra and Ford’s (NYSE: F) Mustang Mach-E, which offer 0% financing on certain models. They also advise not to assume that your bank offers the best rates and to shop around, including checking with credit unions and the financing arms of car manufacturers. The key takeaway is to thoroughly compare financing options to save money in the long run.
Transcript:
All interest rates went up.
And just if you bought a car, you found out that interest rates on cars went up.
So we’re going to suggest to people that they be more careful shopping for car loans.
And I’m going to give you some examples.
Look for cars that aren’t selling well.
Now, they’re not selling well either because they’re crummy cars or they’re just not selling well because there isn’t demand for them and they’re fine cars.
Maybe they’re ugly or the paint jobs are bad or whatever it is.
I’ll give you an example.
Two examples.
And they’re EVs.
Subaru, which makes phenomenal cars and wins all the awards for car quality.
They really do.
Called the Solterra.
It is their EV.
If you really want a Subaru and you say, well, I want an EV and I love Subaru, 0% financing for 72 months.
Now, you can’t get that rate on the gas-powered Subarus.
But if you said, I’m interested in EV and I really want one from a company that’s got a sterling quality reputation, Tesla’s charging sort of normal interest rates.
They’re charging six up to 10, depending on your credit score.
So you want to look at, you’d want to look at the Subaru and the same is true with Ford.
Ford is trying to get rid of their Mustang Mach-E’s, their EV crossover, whatever they call it.
If you buy a 2024 market, there’s some interest rates on it.
If you will take some of the 2023 new ones off their hands, 0% financing for 72 months.
So my first piece of advice is this.
If you’re looking for a car, see who’s offering 0% financing for whatever number of months it is.
If it’s within your price range and it’s the type of car you want, be it a pickup, SUV, sedan, sports car, whatever, look really, really hard at whether or not a 0% financing deal is good for you because I’ve got to tell you something.
The difference in car payments between 7% and 0% over 72 months, if you’re buying a car for $50,000, it’s $10,000.
So that’s piece of advice number two.
The next piece of advice is don’t always assume your bank has the best interest rate.
I bank at Chase.
I have a very good credit rating.
Chase wants over 7% to loan me money to buy a new car.
Okay, so yeah, it’s not used as a warranty, everything.
I’ve been a customer there for many decades, and it’s like, nope, 7%.
Very often, the car companies themselves, which have these financing arms, they have them because they want to make money on the money they loan out.
So they, you know what? 3%.
And they, you know, offer you 5.5%.
So shop.
Don’t just shop cars.
Shop interest rates.
Yeah.
Interest rates based not just on the interest rate itself, but the number of months involved.
Yes.
Banks and credit unions.
Leasing a car or paying cash.
But you just mentioned a very good one.
If you’re a member of a credit union, very often they offer the lowest rates available for almost anything you can buy that bears an interest rate.
So look at what the car companies want to offer you.
Look at whether or not you’re willing to take a car that may not be the most popular car in the world, but it still falls within sort of the range of what you want to buy and you can get 0% financing.
Look at your bank very carefully because they are not your friend when it comes to car loans.
No.
And when I said stay away from the credit union, I mean, stay away from them until it’s a last resort.
You know, go to the car companies, see what they’re offering.
And even if it’s not 0%, it could.
Thank you for reading! Have some feedback for us?
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