When's 0% financing the least costly (best) option?

Question

Kelley Blue Book counters 0% financing (For brevity, I show only each point's topic sentence):

1. 0% financing usually requires a shorter-term loan, which can require higher payments.

2. Zero-percent financing requires unblemished credit to qualify.

3. 0% financing is available only on a limited number of models in dealer stock -- not on special orders or certain option packages.

4. [I questioned here about this.] 0% financing is usually offered in an either/or situation with a cash rebate and you must choose between the two.

5. If you qualify for 0% financing, negotiating a lower price on the vehicle may be more challenging.

6. Even if you do not qualify for 0% financing, excellent interest rates are available.

Suppose I manage to defeat the dealer at his/her vile caveats, pitfalls, and traps behind 0% financing as above. Then when's 0% financing wise? How does it compare with the other 2 car payment options (financing vs lease)? In any case, I forever embrace this superlative advice on never discussing how to pay, before settling the total car price.

Answer 1

A Lease is an entirely different way of getting a car. In two situations it makes sense, in all other scenarios it generally doesn't make sense to lease.

In the case of always wanting a new car every 2 or 3 years it can make sense to lease. Of course if you drive more the allowed miles you will pay extra at the end of the lease.

If you can take the monthly lease as a business expense leasing makes sense.

Otherwise you want to pay cash, or get financing. Does zero percent make sense? Sometimes. The only way to make sense of the numbers is to start with your bank, have them approve of the loan first. Then armed with the maximum loan amount they will give you and the rate and the length of the loan, then visit the dealer.

You have to run the numbers for your situation. It depends on your income, your other expenses, your credit score, your bank, what deal the dealership is running, how much you have for a down payment.

Here is an example. For a recent loan situation I saw: 36 months, 1.49% rate, 20K loan, total interest paid: ~$466. Armed with that information can the person get a better deal at the dealership? There was only one way to find out. In that case the credit union was better. The rebate was larger than the interest paid.