Money down on 0% financing?

[Cloudlb]

I've heard that you shouldn't put any money down on a new car, or at least not a substantial downpayment, if you qualify for a 0% financing deal.  I'm not sure I understand the logic in this--can someone explain?  Keep in mind that my ultimate goal is to pay off my new car as fast as possible. 

[Watchmann]

The rationale is if you are being loaned money at 0% you should keep your own money (hopefully invested at more than 0%) and use the loan companies money.   But if you put nothing down it may decrease what they will loan you, they like to see some money put down on the vehicle (skin in the game).

[andre181]

Watchmann is right. If you are loaned money at 0%, you should save you down payment in you savings account or investment and make a profit in interest.

But with a brand new car, without making a down payment, you will be significantly upside down the minute you drive off the lot. 

If you pay off as quickly as possible, make a down payment. 

[Travis-84]

Lets say a 20k car is worth 17k the minute you drive it off the lot.  If you put 3k down, then techinally you won't be upside down on day one, but either way you are out 3 grand, if its a downpayment, or safe in a savings account.   I would rather have it in a savings account, even if its only earning 1% intrest.  You can always apply it to the car payment in the future, but you can't call up the loan company and ask for your money back.  Just don't take that extra money and buy a big TV.

The only reason I way I would put down money on a zero percent loan is if a down payment was required to get the 0% interest, or you had to keep your debt to income below a certain level, to qualify for a mortgage. 

[Anonymous]

It is also important to note that 0% is not always the best route to go, you need to do your math first.

In most cases to get a 0% you give up most if not all the rebates. On transaction @20-22K and lower- offered rebates and good bank financing rates could be better then 0% alone.

lets look at a $20K car. tax title fees its $22.5. and you are putting a $1000 down just because.

0% no rebates for 60 months gives you $358

4.9% and $3000 in offered rebates gives you a $348 payment and an actual savings of $650