How do dealers make money on 0% financing?
"How do dealers make money on 0% financing? I'm in the market for a car and I saw 0% APR financing from dealers. While that's good for me, I don't understand why the dealer offers it."
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Answered on Jul 28, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
“Dealers don’t make any money on 0% interest loans for new cars, or at least for people who make their payments on time.
The real way that they make money on 0% financing is by gambling on whether you’ll be late on your payment.
If you read these contracts, the fine print usually shows that there are heavy fines if you miss any payments.
No interest loans are also a way to lure in buyers that wouldn’t normally be in the market for a car, so to that degree, they’re also used as a way to increase sales.”
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