What 0% Financing means to you

Of all the incentives released by manufacturers, there is one that is above and beyond any other. That is 0% APR. Financing the entire amount of a vehicle at 0% interest is 100% beneficial, if you keep the vehicle the full term of the loan. Normally, financing $25,000 at 72 months (extended terms are common in today's market) will give you a payment anywhere from $427-$574 depending on your interest rate. The same amount at 0% is $347. Obviously, you must take into account a couple of things. First, 0% is only offered on new vehicles. Second, you have to compare the amount of interest you will pay versus the rebate offered in lieu of the 0%. Often, the manufacturer makes you choose between a special rate or a healthy rebate. So, lets say that that same $25,000 you would be financing at 0% would be $21,000 after a $4,000 rebate. How do you decide what is best for you? All of a sudden, that $427 payment is $358. That is still higher than a 0% APR payment at $25,000, but what if you typically only keep your vehicles 2-3 years? Even though you would have a lower payment, your actual payoff would be higher if you chose the 0% financing. Too much to think about? To break it down in the simplest of terms, 0% financing is beneficial when you keep your vehicle throughout the entire loan, while the rebate offered instead of the o% is beneficial if you like to trade every 2-3 years. Solution?