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Car Dealer Tricks: No Payments For 6 Months

When it comes to selling cars, dealerships are willing to try any and all sales tactics and gimmicks. They’ll copy programs from different industries, disregarding tremendous differences between businesses. While dealerships are to be commended for their creativity and ingenuity, sometimes the sales tactics end up costing consumers.

The “No payments for [blank] months!” sales gimmick doesn’t work in a consumer’s favor – at least when it comes to buying a car.

One example of a bad-for-consumers sales gimmick is the concept of “No Payments for [blank] Months!” The concept, borrowed from the furniture industry, seems solid enough. The dealership sells you a car and promises that you won’t have to make any payments for some period of time (let’s say 6 months).

Here’s how it works:

The dealership sells you the car for a price that includes 6 months worth of car payments. After the financing is approved, the dealership gives you a check for the amount of your first 6 payments. In effect, it’s no payments for 6 months.

Here’s why it’s bad:

1. You pay more interest, finance charges, and sales tax with this “deal” than you would if the dealership discounted the car for the same amount that they’re giving you to make your first 6 payments. Granted, you’d have to make the payments yourself, but you’d save money in the long run.

2. You can’t negotiate the price. Dealerships will be quick to tell you that you’re not going to get a discount if you decide to take them up on their ‘no payments for 6 months’ offer. While these deals sometimes work out to be very good, most of the time you end up paying more for the car than you otherwise would.

3. You need more time to get into an equity position. If you buy a car but don’t make payments for 6 months, you effectively create negative equity. After all, the car is depreciating as you use it, but you’re not paying anything to cover some of your depreciation. At some point when you do start paying, you’ll have already lost months of value before you ever make a payment.

Mitsubishi tried this promotion a few years ago, and all it got them was a large number of customers that would never buy a Mitsubishi again. The promotion was “no payments for 12 months,” and people clamored into dealerships to get a new Mitsubishi. However, after 12 months had gone by, these people had experienced a full year of depreciation without ever making a payment. As these people tried to trade-in their cars, they found out they were FAR behind in terms of reaching an equity position. In other words, they were stuck with the cars for a very long time.

Save the “no payments” deals for the furniture store (where they belong).

6 Comments Post a comment
  1. Dear Author,

    Hope you are having a wonderful day.

    I really enjoyed the article.

    It was very informative, but I would say that for me, given my current situation, no payments for 12 months would be a great benefit even if it meant not having an equity position at trade-in time.

    My goal ideally, which is how most consumers think in terms of wishful thinking (smile), would be that in 12 months everything would be different and I would be able to ideally make additional payments to be better positioned come trade-in time.

    I do not have any criticisms of the article beyond, each person should evaluate their situation and try to make the best decision possible after doing some research and understanding the potential pros and cons for that given decision.

    Have a wonderful day.


    June 23, 2010
  2. Eli #

    I’m looking now for the deal ” no pay for 6 months” for a new car and it’s explanable why: I have a car to get work and back,so I drive now 2003 Toyota Camry, 200,000 km on it…and I drive a lot…Thinking about that my car would not start one cold day or I may need expencive repair in close future also not a good perspective…This month I bought a house and I prefer to repair my basement now and start pay for the new car 6 months later….In other situation I wouldn’t go for the deal of “no pay for 6 months”

    April 17, 2011
  3. Will #

    The more you’re willing to pay each month, the more room the salesperson has to work. The article recommends ignoring the question of monthly payments until you’ve negotiated the price of the vehicle.

    July 20, 2013
  4. tsietsi #

    Am looking for a car to get a job so they need me to have a car can’t I get any finance or help

    June 28, 2016
  5. tsietsi #

    Am looking for a second hand car to get a job am not employed at the job I applied they need people with cars and a starting salary is 10000 I need a second hand car and start paying in 2-3 months time

    June 28, 2016
    • Jason Lancaster #

      Tsietsi – It’s very difficult to get an installment loan for a car without having a job. Unless you have a lot of cash to put down, I think you’ll find it impossible to get a car loan until you’re employed.

      My advice is either to buy a very inexpensive Toyota or Honda, or perhaps borrow or rent a car until you’re employed.

      June 28, 2016

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