In recent years, zero percent financing has become an increasingly popular financing option offered by most car manufacturers on new cars and trucks. While it does sound great and is extremely appealing to many car buyers, there are few things attached to it that may diminish the benefits.

Commonly, car dealers offer an alternative of a zero percent financing or a cash rebate on the vehicle purchase price. Let us say, that you are confronted with an offer of getting a cash rebate of $3,000 or a zero percent financing. While you are going to have no interest to pay, you will end up paying $3,000 more for a vehicle that you may have saved otherwise. Should you pay off your loan early, the advantage of taking zero percent financing would become null.

It is important to keep in mind that any car is a quickly depreciating asset. Taking a rebate instead of a zero percent financing incentive may help you to reduce the gap between the loan balance and the vehicle fair market value. Since your car depreciates most in the first year of use, having it totaled or stolen may leave you upside down on your zero percent auto loan since your insurance company would not cover extra $3,000 you paid for your vehicle. That means that you would have to come up with the difference to cover the remaining loan balance.

It is important to remember that nothing is truly free in this life. Financing incentives, typically coming from the corporate offices of car manufacturers, are most commonly hidden in the vehicle selling price. Car dealers, sometimes offering zero percent financing on their own, follow the same strategy.

How Does It Work?

While it is somewhat understandable how financing incentives offered by auto manufacturers work, zero percent financing offered solely by a dealer may raise your eyebrows. Obviously, banks are not going to finance you at no interest, no matter how good your credit is, since they have to make money off you to stay in business.

What usually happens is that auto dealers rebate the bank upfront for the interest charges that a customer would accrue and pay to the bank otherwise. In simple terms, your dealer pays your interest for you. Since they are not going to make it a money-losing proposition, they have to compensate these expenses somehow. That is why these costs are built into the vehicle purchase price.

Typically they are offset by a rebate that a car manufacturer would give you on a new car purchase and/or an incentive that an automaker gives a dealer for higher volume sales. What this also means to you that there is less negotiation power on your side, since a dealer would be less eager to go down on a vehicle price in this case.

Financing Incentive or a Cash Rebate?

What this means to you is that a simple mathematical equation needs to be solved. When approached with a choice between the rebate and a zero percent financing, calculate how much interest you would normally pay on a car loan and compare it to the amount of rebate. If your interest charges are going to be greater, it may be time to consider zero percent financing. Should they be not, take the rebate and run away from the zero interest deal!

By: Mary Wise

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How many times have you strayed away from your budget by buying two packs of soda because of an offer to save 20% if you buy two? It’s just an extra buck or so, you tell yourself. A dollar past your budget may not be much, but with this habit of buying-more-to-save-more, there is a danger of you mishandling your budget for the week, which might translate to bigger financial blunders.

Grocery stores know just what to do to make you buy more, and sometimes they are not so honest. Know how to identify them so you can avoid being tricked off your budget. The following are some of the most common tricks grocery stores resort to in order to boost their profits, as well as some solutions to help you stick to your budget.

Bargains and Sales

Have you ever bought something you don’t really need just because they’re on sale? You sacrifice a small part of your budget and tell yourself that it’s okay. After all, you bought it at a fraction of its original price. Not! You should know that the comparison of prices – the original and the sale price – is often manipulated, with the original price inflated. People rush to buy items because they think they’re saving much by the doing so when in reality, they don’t save anything but a penny or two. So the next time your see a big bargain banner, don’t be fooled by the comparison price. Take the item’s original price, as well as its sale price and compare with similar items to check if the items really are on sale. Establishing a base knowledge of regular priced items will help you verify whether the sale is indeed a bargain.

The Numbers Game

A sticker saying “Get 5 for only $5″ or “Buy Two, Take One Free” may sound appealing. But before you grab those items, ask yourself: “How many of these do I really need?” There is no use buying five items when you only need one.

Ask the grocer if you can purchase the item on the sale amount – that is, $1 each – without having to buy all five. Sometimes, this is allowed, but grocers do not advertise it just so you buy more. Also, do get a hold on the unit price, so you know if there are actual savings.

Free Samples

Free samples are supposed to be just that – free. But why people feel as though they are indebted or obligated to purchase the product after getting a free sample escapes logic.

The next time a sales agent approaches to hand you a free sample, try to enjoy it guilt-free! But if you have a feeling that you’ll have a difficulty not purchasing from the agent after the free sample, just refuse the free item.

These are just some of the most popular marketing strategies used in grocery stores. But whatever marketing ploy you encounter, the trick is to simply relax and inspect. Also, don’t forget to bring your grocery list and to stick to it. Bringing a calculator will also be a good idea so you can keep tabs on the amount of your purchases even before you get to the counter.

You should also have a couple of wallets or money clips, so that you can take a separate one with you for when you buy your groceries. Having a separate money clip will make it easier for you to bring just the budgeted amount and to leave your cards at home so you avoid unplanned purchases.

By: Bradlley Mckoy

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