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With more Americans opting for smartphones over cars, many dealerships are seeing fewer customers walking onto their lots looking to drive home in a new set of wheels. As a result, those who do make it through the door could find themselves overwhelmed by offers from car lots looking to move inventory.

Is It Smart To Buy A Car With 0 Down?

Let's be honest, with people living on credit these days, with their home equity lines of credit maxed out and college tuition looming over their kids' heads, the thought of buying any big-ticket item like a car is daunting.

It doesn't take much to whip the average Joe into a frenzy about an issue that affects him directly; for example, it only took Google three searches to find 130 million articles on " 0 Down" car advertisements.

Generally speaking, most Americans are under-educated when it comes to personal finance issues (despite what Dave Ramsey may say). So I'm willing to wager that at least one or two of those 130 million people have fallen victim to the " 0 Down" car scam.

The one thing that has probably saved me from moments of major buyer's remorse is my understanding of simple arithmetic. The following example may be rather simplistic, but it illustrates this point rather effectively:

Buying a car with 0% theory

Let's say John Doe walks onto a dealership lot and finds the perfect care for $30,000. He puts $0 down on his new whip and gets an interest rate of 5%. To break even on the deal (i.e. pay off the loan) John will need to make payments totaling $31,500 over 60 months (5 years).

" 0 Down" car advertisements are designed to prey on your fear of losing out on a great deal. Unless you have cash lying around somewhere, if someone is trying to sell you a car for no money down, it's probably because they know something you don't. The truth? There's always a catch when it comes to buying or leasing anything " 0 Down." You might think that all of this talk about prices increasing is just crazy talk, but the fact is that personal debt has been growing steadily since the 2008-2009 market crash. If history truly does repeat itself, then one day the housing bubble will burst again, interest rates will skyrocket and people will be left with little choice.