It depends on what you use it for. 0% finance offers can be tricky to understand. The way credit card companies make a great deal of their profits is the interest rate, but there are ways they can still make 0% financing work in their favor. Financing offers with 0% interest can be helpful and they can be hurtful. If you take out a credit card at a store to purchase something you need and you get 0% financing for it, then yes it’s a good deal. You were going to buy it anyways. Similarly, when you get 0% financing on something for a long period of time, you are locking in that rate even if the rates go up.

A little bit of math at the dealership goes a long way for our credit repair clients in NH, MA or ME.

Watch out for 0% financing offers at car dealerships. 0% financing offers are often applied in lieu of any or most rebates that would have been applied at a conventional rate. The conventional rate may have been low anyways. For example, you are looking to buy a car at an MSRP of $20K. There is a rebate of $1,000 that can be deducted if you take 0% financing offer. This means your total cost of your loan, no matter your loan period will be $19K. Sounds pretty good right?

Often, if you opt into the conventional rate, there are additional rebates that can be applied. For example, that same car you are looking to purchase with an MSRP of $20K may have another $2000 that can be applied if you take the conventional rate. Let’s say the conventional rate is 3% In this case, with $3K being reduced off the sticker price, your total cost of car loan even at a longer term of 72 mos will be $18,597, which is less than the 0% financing offer. We understand what it takes to keep your score where you want it to be. Our in depth process educates and familiarizes our clients on how they can get their credit back into shape.

Before you sign up for your favorite retailers store card to snag that enticing 0% offer…

Watch out for 0% financing on store credit cards. 0% financing is often only applied for an introductory period. After the introductory period, credit cards will hit you for the full amount of interest. Here is how it works. You will get 0% financing for 12 mos. Simply don’t pay the full balance off before the introductory period is over and watch the “retroactive interest” be applied on your next statement. This means you will owe interest on the ENTIRE ORIGINAL PURCHASE PRICE. Typically, interest rates at retailers are crazy high (high teens, low-mid 20s). If you decide to take the 24 mos 0% interest offer at Best Buy for that new home theater system, you better set up bill pay. Make sure it is paid off in, let’s say 22 mos or you will see some serious charges appear after the 24 mos is up.

Repairing credit is our specialty. Interested in learning more about special financing offers to make sure you are doing what’s best for you and your score, please get in touch with us here.