One automaker is offering an attractive new type of auto loan, but not everyone is convinced it’s a good deal for borrowers. Ford is now offering 72 month financing and 0% down on their vehicles, but as auto loan defaulting surges, the company could be leading buyers down the wrong path.
The “Ford Freedom” sales event requires buyers to use Ford Credit APR financing. Ford Credit is a part of the Ford company, which means it takes on either benefits or problems associated with the loans it gives.
The loans will be paid through 2022, but some companies are warning buyers that a long-term financing plan isn’t the best idea.
“Don’t be fooled into thinking depreciation slows much after the first year. The fact is, new cars continue to lose value for four more years, averaging a decline of 15-25 percent per year,” according to CarFax.
The average borrower has approximately $17,900 in auto debt. Considering the rate at which cars depreciate, a long-term financing plan may not be a viable solution.
That being said, many people who enter into a long-term financing agreement don’t fall into the subprime auto leads category. However, if more than three payments are missed, then the loan will default.
When a loan defaults, it means that as a borrower you have failed to make payments on your loan. This results in the lending bank or other financial institution taking back your car.
However, most banks will work with you to establish a payment plan.
Even if you’re close to defaulting or think you may have trouble in the future, a repossessed car only costs the bank money. In the vast majority of cases, they will make an effort to ensure that you can make your loan payments in full and on time.
If you wish to avoid situations like this, you need to be smart about your auto loans. Unfortunately, many consumers with bad credit assume that they won’t be able to get a loan at all, which makes them more vulnerable to deals that sound too good to be true. In reality, a growing number of car dealerships are pursuing auto finance leads that include subprime borrowers.
In fact, thanks to new online tools, it’s never been easier for borrowers with bad credit to connect with dealerships willing to work with them.
In most cases, short-term auto loan leads are the way to go. The payments may be higher, but you’ll accrue less interest as your car ages and depreciates.
However, some people find that a long-term loan repayment program works best for them. The key is to be aware of your financial situation before you even enter a dealership.
The Ford 0% APR financing for 72 months sounds like an attractive offer, but before you sign up, search for the best auto finance leads effectively and within your price range.