Upside Down Car Loan?

[Anonymous]

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@LakeLife wrote:

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... My thing was, why would I put any money down when I am getting free credit?  

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There's no such thing as free credit from a car dealer. 

0% interest deals are offered in lieu of lower sales price. When a customer walks onto the lot the dealer sees four potential avenues of earning off that customer: sale of vehicle; financing of vehicle; trade-in; insurance sale.

It is naive to assume the dealer is willing to lose one profit opportunity without compensating for its loss in another.

[LakeLife]

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@Anonymous wrote:

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@LakeLife wrote:

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... My thing was, why would I put any money down when I am getting free credit?  

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There's no such thing as free credit from a car dealer. 

0% interest deals are offered in lieu of lower sales price. When a customer walks onto the lot the dealer sees four potential avenues of earning off that customer: sale of vehicle; financing of vehicle; trade-in; insurance sale.

It is naive to assume the dealer is willing to lose one profit opportunity without compensating for its loss in another.

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Ford Credit offered the 0% which has nothing to do with the dealership's bottom line.  Please don't call me naive, as that's very rude.  Trust me, I got as good of a deal as possible on my Focus.  You don't know any of the particulars and aren't at all knowledgable on my car buying experience.  There was no trade in, and I saved $5k off the $26k MSRP.  I also negotiated my GAP down to the lowest they would take.  

This is the last I'll say on the subject.  The OP was asking how it's possible, and I laid it out.  We're going off the tracks now.  

[Anonymous]

1) Buy a desirable model- there are several models out there where a used vehicle is the same price as a new vehicle. 

2) Buy at a good time of year. My spouse bought a new Mustang GT for less than KBB and he's got a good $5000 in equity without paying any extra. 

3) Plan to drive your vehicle long enough where you aren't rolling your old loan into your new loan. 

4) Don't do Trade-ins. You lose price transparency and almost always could have sold your old car for more and gotten a better deal on a new one without the trade. 

I'm about $2000 underwater on my car because I had a trade-in that still had a loan balance. I also put nothing down on it which didn't help either. Unfortunately though, my old car was suddenly not drivable and had to be replaced in a panic. Obviously, buying a new car is more worthwhile if you drive it long enough to get a few years without a payment to save your next down payment. 

[Anonymous]

Get your loan outside the dealership. Dealers markup your loan and ancillary products by an average of $1800 - that's more profit than they make on selling the car. You can also spend the time you need to consider your options without the F&I manager pressuring you so you know you can actually afford the loan.