New Money Only. Rates and terms are subject to change without notice.
*The Annual Percentage Rates (APR) are quoted “as low as” depending upon the applicant’s individual credit history. Rates quoted are based on approved credit. Your APR may be higher based on your credit information obtained from consumer credit reporting agency Metropolicatn Services Credit Union uses. Other terms and restrictions apply and are subject to approval.
**Signature loans: 4.99% APR for up to 36 months or 5.29% APR for up to 48 months, merit based, when you purchase or refinance a vehicle loan from another institution to Metropolitan Services Credit Union.
What’s the Catch with 0% Financing?
If you’re interest in buying a car, you’ve probably seen a lot of low-interest special offers and incentives from various automakers. Many brands offer 0% interest, which suggests you can finance a car and pay no interest over the term on the loan.  Does that offer seems to good to be true?  It may be.

How’s it possible?

Since you’re not giving the bank any incentive to lend you money, you might be wondering just how it’s possible to get a 0% interest rate.  The answer is usually it isn’t the bank doing the lending but rather the automaker itself.

The way an automaker can make money with a 0% deal is simple: It still earns the same amount it would earn on any car deal, but now the money is earned over a longer span.  So, the money isn’t made on financing but rather the car itself.  This means that 0% deal usually aren’t a scam.

Bait and switch?

While 0% financing isn’t usually a scan, it can often be difficult to qualify for, and that where many shoppers run into disappointment.  Dealers will often advertise 0% interest, for example, even when it’s only available on select models or to shoppers with the absolute highest credit scores and a long credit history.

Dealers love to offer 0% financing as a way to get customer in the door, but the reality is 0% financing is quite hard to get.  While many customers may come in for a great financing deal, as few as 10% will actually qualify.  Additionally, these loans typically have shorter terms, which means higher monthly payments and hidden fees.

Compare Your Options

Taking the 0% financing will typically require you to forfeit the rebate money and/or your ability to negotiate a better price.  The rebates and/or discounted pricing could save you hundreds, even thousands of dollars over the term of the loan.

 Metropolitan Services CUAuto Dealership
Dealer rebate-$3,0000
Finance Amount$17,000$20,000
Payment 5 years @ 3.49% $310.00$334.00
Finance Charge$1,548.000
Sales Tax (6.5%)$1,105.00$1,300.00
Total Cost$19,653.00$21,300.00
Total Savings$1,647.00

This is an example of the possible savings when choosing weather or not you should take the rebate or the 0% financing.  As you can see in the example, the 0% financing is not always going to be your best option. If you would like some help deciding what route to go, please call or stop in and we’ll gladly go over the options with you and try to help you decide.

Get In Touch


(651) 602-8105

Call us today with questions about our services.


Office Location

475 Etna Street, Suite 10
St. Paul, MN 55106
M-F: 9:30 AM - 4:30 PM

Member of the Minnesota Credit Union Network, CUNA and regulated by the NCUA.

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