Unexpected vehicle problems seem to come up at the worst possible time- when the rent is due, the kids need school supplies, or savings are low. An emergency auto expenses fund would come in handy when costs are more than you can handle.
And a deferred-interest promotion can make the payment arrangement even more manageable. Just be sure you understand how it works.
A deferred-interest promotion is somewhat different from a zero-interest offer. Zero-interest financing offers mean a purchase can be interest free if you pay off the balance in full before the end of the promotion period.
With deferred interest, creditors delay interest charges until the end of the promotion period. As long as you make minimum monthly payments and pay off the balance in full before the end of the promotion period, you won't be responsible for interest charges.
With a deferred interest program, it is essential to make your minimum payment each month to avoid building up the debt cycle of compound interest. One method to avoid this cycle is to set monthly reminders in advance of the payment deadline or find out if there are automatic withdrawal options.
Establishing a savings account strictly for short-term emergencies is a starting point to deal with these situations as well. A standard savings account that provides quick access to cash with a local bank or credit union can pay dividends down the road.
If you're like a lot of people, though, when you run into a jam with your vehicle, you may not have an emergency fund for making the repairs. In fact, fewer than 40% of Americans have even a $1,000 cushion for emergencies of any kind, much less auto repairs. Thus, a deferred-interest arrangement can be a handy solution in an emergency situation. It's also a less costly option than borrowing from friends or family, or getting a payday loan.
When you suddenly have auto repairs that are more than your pockets can bear, ask your repair shop about Credit First National Association's deferred interest program. CFNA helps with funding emergency auto expenses through a deferred-interest financing option.