What does 0% APR really mean?

[FrustratedUser]

Does it mean 0% rate or are there more hidden stuff?

 

[vi edit]

No interest on the financed amount.

Only "catch" is that the dealers won't deal as easily since they know you know you are saving thousands from the financing.

 

[HomeBrewerDude]

depends.

Credit cards usually limit the 0% APR term to 6 months or so, then the rate goes to a so-so rate.

Car dealers usually limit the 0% APR to 24 months (maybe 36 for more expensive cars).

Retailers (Best Buy etc...) 0% APR is usually where you have to pay back interest IF you don't pay off the item by end of the 0% term, but the APR you get kicked out to is usually 18%+.

just my 2cents... i am not an expert by any stretch.

 

[kranky]

Just so nobody gets the wrong idea, 0% APR doesn't mean there aren't any restrictions. You'll still have to make your payments on time, and chances are if you don't, your 0% interest deal will evaporate. In the case of a credit card, you can't charge up to the limit and assume you don't have to pay anything back until the 0% promotional period expires. Be very careful about late payments also - the fine print may say that if you are late, your interest rate goes up to 22% or some horrendous number.

In the case of a car, as vi_edit said, it's usually a trade-off between the 0% interest and a rebate. You'll have to figure out which is the best way to go. To keep your options as flexible as possible, tell the dealer you will be paying cash and you're only interested in the best price. Once you negotiate a price, you can change your mind and give back the rebate to take the 0% interest if that's what is best for you. But waiting until the end gives you the bargaining power and you know exactly how much the rebate is, so they can't play games.

 

[RossMAN]

I agree with everyone.

If it's car financing there are several financial calculators out there which will help you determine if 0% APR or a rebate is better way to go. I would think as long as the amount financed is $20,000 or more and you can afford the monthly payments, 0% APR would be the way to go - FREE MONEY!

I think yamahaXS nailed what I was going to say.

kranky brings up a good point. The CitiBank MasterCard I was recently approved for was offering 0% APR on balance transfers until November 2003 but in small print it says as long as my account is in "good standing" which basically means no late payments. I am still obligated to make my minimum monthly payment every 30 days. Since it's 0% interest I probably won't make large payments, I'll reserve those extra funds for more expensive credit cards.

 

[FrustratedUser]

Thanks guys.
I meant 0% APR on credit cards, and I know I have to pay and that late payments are a NO-NO. I just read somewhere that 0% APR really meant 0% above some other rate.

I'm looking into refinancing my car and get the 0% APR card as soon as I can get one. haven't been in the US for more than 6 or 7 months now and by now I should have managed to build a small ammount of credit since I'm taking it up the a$$ now with this credit company.
I should try a credit union too.

 

[HiveMaster]

ALL credit cards have a 0% finance rate...if you pay the balance off every month.
That is why I have been an Amex member since 1980.