How does special financing work

These choices will be signaled globally to our partners and will not affect browsing data. We and our partners process data to: Actively scan device characteristics for identification. I Accept Show Purposes. Your Money. Personal Finance. Your Practice. Popular Courses. Loan Basics Auto Loans. What Is Special Financing? Key Takeaways Special financing loans are offered to car buyers whose credit history would make them ineligible for a regular loan.

Car dealers promote special financing because it helps them attract customers and move inventory. Car buyers should be aware that special financing loans are more expensive and may ultimately prove unaffordable, resulting in having the vehicle repossessed by the lender.

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Related Terms Subprime Rates Definition Often offered to borrowers with poor or limited credit histories, subprime rates charge high interest on mortgages and other loans. What Are the 5 C's of Credit? The five C's of credit character, capacity, capital, collateral, and conditions is a system used by lenders to gauge borrowers' creditworthiness. Understanding Trust Receipts A trust receipt is a notice of the release of merchandise to a buyer from a bank, with the bank retaining the ownership title of the released assets.

Please note the following calculation is just an example. An actual billing statement might be slightly different. You will start paying interest only on what you still owe, and pay at the annual interest rate in your contract. This is because your interest was only deferred.

Here is how we did the math in our example:. But, there are still some important things to consider for both zero interest promotions and deferred interest promotions:. Join the conversation. Skip to main content. The difference between zero interest and deferred interest promotions A zero percent interest promotion will not add interest based on the balance of your promotional purchase during the promotional period.

But, this interest is not charged yet. Again, this interest is not charged yet. Rob Looker is a senior copywriter for RoadLoans, I write about cars, money and their meeting place at the junction of direct auto lending.

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