It's Just A Sales Tactic
Ray wants to know what's wrong with buying a new car at 0% and how a dealer makes money. Dave explains.
QUESTION: Ray on Twitter wants to know what’s wrong with buying a new car at 0% and how a dealer makes money. Dave explains.
ANSWER: The dealer makes money a lot of different ways. The only way you get 0% interest—and less than 14% of people who walk onto a car lot qualify—is your credit has to be perfect, and you pay full retail—MSRP (manufacturer’s suggested retail price)—sticker price for the car. If I can buy the car for much less than you bought it for and yet you got 0% interest, how is that 0%? In other words, a cash buyer doesn’t have to pay the same price. So how is that 0%? It’s not! Besides that, if you take a new car and drive it off the lot, as soon as the wheels clear the curb and it has been titled into your name, the loss in value would make you puke if you calculated it. Given that, how is it 0%? A new car loses 60-70% of its value in the first four years. How is that 0%?
Zero percent is called a sales tactic. You got sucked in and rationalized a purchase that you wanted to make. That’s what it was.