0% auto loans’ disadvantages

One of the most publicized loan offers is the 0% auto loans. The ads that promote this type of car finance tries to attract the attention of probable customers by projecting the benefits that can be obtained from this. However, there are certain disadvantages involved in this loan arrangement. This includes the purchase price of the vehicle, the credit requirements, and the length of the loan.

Credit requirements

One of the most significant criticisms thrown against 0% auto loans is its very strict credit score requirements. This type of loan is offered to creditors with good credit record. The most common credit score requirement for this type of loan is 700 as the minimum. There are also lenders that set the credit score requirement of up to 720 as the minimum. Due to this requirement, 0% auto loans are only offered for good credit holders.

This loan arrangement however does not usually offer rebates and other incentives. All you have is a loan that does not involve interest payments.

Length of the loan

0% auto loans are usually offered with shorter loan terms. The most common loan term involved in this loan could only cover 24 to 36 months. This could simply mean that the monthly payments are usually higher. You might end up having a hard time coping with the payment requirement. It could also ruin your credit record and reduce your present credit score.

Due to this fact, you might also need to compare 0% auto loans with other offers in order to determine which is better. When not carefully planned, this type of loan could possibly cause you to experience a more complicated credit situation.