Even with the decline in rebates, cars are still the most affordable they’ve been in two decades, says David Littmann of Comerica Bank. But cut-rate financing may not give the lowest monthly payment. It’s now cheaper to take the cash rebate–$2,002 from GM or $2,500 from Ford or Chrysler–and pair that with a regular five-year loan at 5.8 percent. If you skip the rebate and opt for the three-year loans at zero percent or take the dealers’ cut-rate financing on five-year loans–3.9 percent at Ford and GM and 4.9 percent at Chrysler–your monthly payment is likely to be higher. Deals on foreign wheels are scarce. Incentives on Asian models average $849, while European cars average $1,324.
Loan rates will go up when the Fed starts raising interest rates, but to keep buyers coming, Detroit will still have to put cash on the hood. Ford bragged last week that it will price its newly remodeled Expedition SUV at $31,295, the same as the old model’s sticker. But the old model has a $2,500 rebate, so charging full sticker for the new version would represent a big price jump. So despite nifty features like a power third-row seat, Ford will have to “launch that vehicle competitively, even if that means incentives,” says VP Jim O’Connor. That means deals will keep on rolling even after zero percent runs out of gas.
