Beware of the Hype of Zero Percent Interest
As advertised on Ford’s website, you can purchase a 2017 Ford Fusion with 0% APR for 72 months plus 1,000 trade assist and then there’s a link to a “disclaimer” right below it which basically reads not all would qualify and deals subject to approval and locations etc.
You may see this advertisement either online or in a commercial or one similar for a credit card with 0% APR and wonder, “Why would I take a loan out against my policy when I can get a 0% loan from these companies?”
I’m glad you wondered and I’m happy to clear it up. As the company’s website shows, there is a disclaimer on that offer meaning that zero percent is rarely a true zero percent. The trade in value is what you are exchanging for the zero percent. As it relates to credit card options, there are usually transaction or service fees that go with that card in order for you to receive the zero percent interest. Any time you are exchanging more money or something else for a zero percent rate, you are still paying money out of your home and your family.
My rule for my money is to keep it. Period. Whenever you owe another person money, you have then lost control of that money. When you borrow from your policy, you maintain control of your money since your policy amount does not decrease and you are not required to pay back the loan (see previous post on paying back loans for more detail).
The only time I would recommend borrowing from a third party lender would be when cash flow increase was the main goal from the loan. We have much detail specifically on when and why you should borrow against the equity in your home. Your home equity doesn’t benefit you at all financially other than giving you peace of mind of ownership. Each borrowing situation is unique and carries specific criteria for when it would be appropriate for the situation.
When you’re ready to get started on creating your financial legacy or if you have more questions, most questions can be answered by watching this video. Start there and then schedule a consult with my team when you’re ready to begin.
