What does 0 percent financing mean?
Insignificancy percent financing is an interest-free loan. Vehivle companies with financing divisions, affection Honda's American Honda Financing Gathering or Regular Motors' GMAC wings, apply the plan to attract buyers to pay for an car. Typically, it is offered as a promotion to crystal gone dated models or amplify an otherwise slow sales time. The loans break for a spell measured in months over which no case is assessed.
What is paid and how is the payment determined?
A buyer who qualifies for zero percent financing makes a monthly bill that is based on the grand complete of the invest in, divided by the expression of the loan. For example, whether a motorcar costs $24,000 and the locution of the loan is 48 months, then the buyer pays $500 per month.
As is the contingency with any loan, the buyer must adjust a monthly payment. In this scenario though, the payment is applied to the principle as no interest is assessed.
Who qualifies for zero percent financing?
When automakers advertise zero percent financing, the words "well-qualified buyers" is often mentioned. The determination of an interest rate is directly linked to the buyer's credit score--the higher the credit score, the lower the rate. These numbers are reported to the Fair Isaac Corporation (FICO), which takes the information and issues a FICO score. This is the score that is used in determining if a buyer qualifies for automobile financing and at which rate.
A "well-qualified buyer" will often have a credit score of 800 or higher.Credit scores are determined by the individual buyer's credit history. The three major credit bureaus review payment histories, debt to credit limit ratios, credit balances and other factors, and then assign a number to the person. This number relates to the person's creditworthiness and whether that person is considered a risk.
