If you’re looking for a reasonably priced new EV, Volkswagen just fired one hell of a salvo by offering zero percent financing for 72 months on the ID.4 S electric crossover. However, even though this is a good deal, it definitely isn’t for everyone, as the car it’s attached to comes with some considerable asterisks. Let’s take a closer look.
Reading the fine print, it seems that residents of Puerto Rico are out of luck, but this deal really does offer zero-percent APR for 72 months with zero down on 2024 Volkswagen ID.4 S models, and it runs until September 3, which means it’s on all summer. Oh, and it gets better: The ID.4 S also qualifies for up to $7,500 in federal tax credits, and if you personally qualify for the full $7,500, that can drop the net price to $38,780 including freight — that’s $100 less than the net price of a base Tesla Model Y once you add destination charges and deduct federal tax credits.
So, why so cheap? Surely, there has to be a catch if Volkswagen is incentivizing its EV so aggressively? Well, the ID.4 has caught some flak for its baffling decisions around interior electronics, and there’s definitely a learning curve to stuff there shouldn’t be a learning curve on. For instance, there are just two traditional window switches for four power windows, with a capacitive touchpad allowing you to toggle between whether those switches work the front or rear windows.
In addition, since the ID.4 S still gets the old infotainment system, stereo volume is controlled through a non-illuminated capacitive touch slider, and to activate the heated seats without going through a submenu, you need to put a finger on each climate control temperature capacitive touchpad, be it the driver’s set or the passenger’s set. Not the most intuitive arrangement in the world.
Oh, and there’s a second, bigger asterisk — since this deal is limited to the ID.4 S, that means you get the small 62 kWh battery pack, which gives this electric crossover a rated range of 206 miles. That’s considerably less than the 320 miles that the base-model rear-wheel-drive Tesla Model Y is rated for, and while a smaller battery pack keeps recharging times manageable, the state of non-Tesla DC fast charging infrastructure in America means road trips in the ID.4 S could be a little challenging.
However, if you’re feature-driven rather than range-driven and can get around the software, the 2024 Volkswagen ID.4 S is currently one hell of an EV deal. We’re talking massaging front seats, 30-color ambient lighting, a panoramic moonroof, and all that jazz. Oh, and even if you aren’t in the market for a compact electric crossover, Volkswagen offering zero percent financing on the ID.4 is a good sign. Payments on a wide variety of cars will get more affordable, it’s just a matter of time.
(Photo credits: Volkswagen)
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You forgot the other asterisk.
It’s ugly as shit.
I’d call it midsize lite, its longer, taller, and wider than my Q3.
Seems like it’d be $100 well spent. And I don’t even really like the Model Y. It’s still just the best deal out there in this market segment. This is close, the Ioniq 5 is also close, but the Model Y still seems to win. Heck, at least the Ioniq 5 is friggen good; the ID4 sucks. The Model Y is worse than the Ioniq 5 but that’s still leagues better than this shit VW.
Went through that exact matchup. The MY got my dollars. Best packaged and most suited for my particular wants. It handles well, goes like stink and is just a nice place to spend time.
Tesla did 0.99% for 72 months on Model Y’s during about 10 days in May when they were trying to clear inventory. After that it went to 0.99% for 60 months until the end of May. Mainly the tax credit eligible vehicles qualified since they pushed how the federal tax credit could be split to pay for taxes/fees and a down payment. A good number of people were able to take advantage of that. Unlike this deal, every trim level was available. Borrow Elon’s money for five or six years for dirt cheap? Sure!
VW knows this will drive traffic. Some buyers will want the AWD version. Those get customer cash if bringing their own financing. But, $45k for a short range RWD EV is just plain silly. Even at $38k it’s still not a fantastic deal. In my opinion.
This financing scheme essentially guarantees a buyer will be underwater on this vehicle. Most buyers will pay only the minimum payment on a 0% loan. Given how fast EVs depreciate, paying the minimum will mean your loan is underwater within months of driving it off the lot and will remain so for several years.
I don’t have a problem with car loans per se. If this deal was limited to very select buyers for whom affordability will not be an issue, it is fine. That is not the reality with car loans, though. For whatever reason, many car buyers end up with payments that they can’t comfortably afford. It would suck to be in a position where you can’t afford your car payment and can’t afford to sell it.
We should stop pretending financing deals like this are a good thing.
Too many people harp about being underwater on vehicle loans. Most American buyers are underwater for several months to a couple years on a car loan, simply because they depreciate so quickly the moment you sign your name and drive it off the lot. If you have liquid assets to cover the gap, it’s not a big deal. If get gap insurance, it’s not a big deal.
Me? I have zero problems being underwater, especially if financing is that freaking cheap. Why the hell would someone put down more money to avoid being underwater?
Of course, don’t use this to overbuy and overextend into something you can’t actually afford, but that’s not the same as being underwater. They often go hand-in-hand, but certainly not always.
Correct. It’s a depreciating asset. Sinking your own money in it to not be “underwater” is an even worse financial decision. Just get gap insurance and stop switching cars like they’re hot wheels.
“It’s a depreciating asset. Sinking your own money in it to not be “underwater” is an even worse financial decision.”
Please explain. This is one of the most asinine statements I have ever read.
If you stick $20K into a $40K car, and it loses 15%, your $20K is now worth 15% less. If you had kept your $20K, you still have $20K + any interest because you should have invested it in the first place.
You can still pay the loan down faster with your $20K kitty, but at least you didn’t lose 15% of it by using it as a down payment on a car. No one’s saying don’t try to get above water. We’re saying don’t dump big dollars just to get above water when you can use that capital elsewhere.
If you get laid off, you have $20K+ any interest to pay the vehicle down and sell it. If you sink $20K into it, you now have to sell the car, and you have less cash on hand to buy another car to get a new job.
Your assumption is that buyers of the ID.4 will have $40,000 readily available. If you have $40k in cash, it makes sense to take the 0% financing, put as little down as possible, and invest the rest (or at least in a high yield savings account). You are using an edge case as an example. The average car buyer takes a loan because they don’t have cash available to purchase a car.
Disagree. 100%. Cash in hand always here. Use credit as a tool. It makes me money, on car purchases and the stock market. Trust me.
And people much smarter than I will ever be have built fortunes the same way. 3 of my 4 siblings were self made millionaires by age 50. No brag, fact.
My net worth is in the 85% percentile for my age so I’m not exactly failing financially. I’ll be a millionaire well before I’m 50, assuming I keep doing what I’m doing (living within my means, investing in the stock market, etc.). I haven’t had a car loan in years, yet I seem to be doing fine.
I don’t have any problem with people borrowing money to purchase an appreciating asset. I agree credit can be used as a tool. If someone wanted to give me a $40k loan at 0%, I would take it and buy index funds.
But let’s look at the situation here. The ID.4 gets terrible reviews and people seem to hate it. It has a relatively short range for a modern EV. It does not have access to the Tesla charging network. This thing is going to depreciate like an absolute rock. It will be a $10,000 car by the time this loan term ends. Assuming normal market returns, the invested $40,000 will earn around $20,000 after taxes. Plus, if you get 0% interest you are forgoing negotiating power. You could have bought this car for well under $40,000 if you paid cash. The math isn’t mathing here.
Anyone who thinks 0% financing on an ID.4 is a way to get rich is delusional. This is a bad deal.
Have you seen the value of used pure EVs lately? In the US? Let’s be real ok?
“Why the hell would someone put down more money to avoid being underwater?”
People get laid off from work. People get sick or injured and can’t work. If you are underwater and can’t pay your car payment, you can’t even sell the car. If you put down a larger down payment, you can at least sell the damn thing.
Plus, if you get in an accident, you are starting from zero. Gap insurance may pay the difference between what its worth and what you owe, but you have no money left over for a down payment on a replacement vehicle.
“don’t use this to overbuy and overextend into something you can’t actually afford”
I agree with this statement. The problem is people use good financing terms to justify buying an expensive car. Again, if these loans were approved for a subset of buyers that can genuinely afford the car, I don’t have a problem with it.
This kind of financing might work for you, and that is fine. It gets a lot of people in trouble, though.
The point of 0% financing is to do better with your money though.
If you have $10K in cash to put down, you are better in all circumstances to invest that and take the 0%.
If you crash the car, the $10K you invested that is now $11K is your down payment. If you lose your job, the money in the bank is your gap insurance; again it has been earning for you all the while.
If you can’t trust yourself not to spend the savings every month or dip into the $10K, then by all means be as conservative as you want with your money, but that is not a failing of the loan terms or the car.
If you are concerned with doing better with your money, why are you spending $40k on a car that will be worth maybe $20k in three years? Wouldn’t it be mathematically advantageous to buy a used car or one that at least has a better depreciation curve?
This illustrates what I find frustrating about car loans. It is not a good financial decision to buy a $40k transportation device that will be worth $20k in three years. Zero percent financing makes this less of a bad decision, but not by much.
Of course it would, my entire post is premised on the idea that you’re buying that particular car either way.
Buying new is very often not rational financially, but carries other benefits that may or may not be worth the difference to you. But if you’re going to do it, you might as well take the 0%.
“my entire post is premised on the idea that you’re buying that particular car either way.”
The problem is that people are not buying this particular car either way. If they were, VW wouldn’t have to trick people into thinking they are getting a good deal by offering these terms. The whole point of 0% financing is to get people to choose a less desirable car over better options.
This could make sense for a buyer that:
Specifically wants a low-spec ID.4 and won’t consider other vehicles (new or used)Has $40k, or at least a large amount of cash availableWill invest the unspent cash on something that isn’t stupid (i.e. Dogecoin or Gamestop stock)Has a stable job and could continue to make payments in the event a market downturn occurs at an inopportune timeWill commit to driving this car for many years, even if it no longer meets their needs or they dislike it
Finding that buyer seems as likely as finding a sasquatch riding a unicorn. But if that buyer exists, 0% financing is a solid financial decision. For the 99.99% of people who are buying this car, it is not a good deal. Again, it is time we stop pretending 0% financing deals are a good thing.
I don’t think VW is tricking anyone.
The ID4 isn’t selling, so they’re putting it on sale. Whether the new terms make sense or not is only up to the buyer and their financial outlook.
I hardly think the median buyer of an electric crossover is a cash strapped lower class poseur at high risk of being laid off. More likely this offer gets normal people in the door of the VW dealership who wouldn’t have considered buying an ID4 without the offer but might consider one now. I don’t think that’s deceitful or even harmful.
Being underwater would stress me out while driving it. I’d buy gap insurance rather than up my down payment, though.
The problem with EV values is that any price reduction from Elon instantly reduces the price of every used EV. An extra $10k in down payment could still leave you underwater once Tesla needs to move Model Y inventory.
You’re right, people lose their jobs all the time. Why put that money where you’ll never get it back; towards car payments? If instead you hold onto that money, if you lose your job, you can use it to make monthly payments for your car, your house, taxes, food, whatever. When you put more money down, you’ve predetermined that’s where it is going to go and you’ve lost almost all flexibility.
And all of that ignores that when interest rates are low for financing, you can even make more money elsewhere even if it’s just a savings account.
Finally, you’re whole entire accident scenario counts against you. If you put $20k down or $10k down while keeping $10k in reserves, and then you total the car tomorrow, what scenario leaves you with $10k in reserves?
Gap insurance. It covers the difference between the value of the car and the balance of the loan in case its totaled (I always think this word should have two l’s).
Otherwise if you owe $40k and the insurance pays you $20k, the difference comes out of your pocket.
If you need to spend all of your cash to buy a car, you can’t afford it at any interest rate. You shouldn’t consider buying an expensive car until you have a decent emergency fund (3-6 months of expenses) that can get you through a period of reduced income. Until then, drive something cheaper.
“If you put $20k down or $10k down while keeping $10k in reserves, and then you total the car tomorrow, what scenario leaves you with $10k in reserves?”
If you put $20k down and total it when it is worth $30k, that leaves you with $10k after insurance pays your claim. The only good financial outcome with this car is if you put down as little as possible, finance at 0%, purchase gap insurance, and total it. I’m not buying a car that needs to be a totaled in order to not be a financial disaster.
You keep moving goal posts it’s not even funny. I mentioned in my very first comment that you shouldn’t overbuy, but that’s a different argument entirely.
You still haven’t explained why it’s a better idea to give the dealer an extra $10k (just to keep using the same made up number) rather than holding onto it yourself.
You brought up job loss; so with or without a 3-6 month emergency stash, why wouldn’t it be better to have it be even $10k larger? I’m not suggesting to not have a 3-6 month stash.
That’s a problem with any financing of an EV though. If anything, the 0% means you’ll be slightly less underwater because your payments will go 100% to principle.
As always though, the trick is what other incentives you give up to get 0%. Usually it means you forego some cash on the hood, and depending on how much that is it may still be cheaper to finance at a normal rate and take the cash up front.
“That’s a problem with any financing of an EV though.”
You are making a great argument that financing a new EV is a bad financial decision. If your car payment can’t cover depreciation, that is a sign you should wait a year or two and buy it used.
The other issue here is why VW needs to offer generous financial terms. No one gives good financing deals for cars that sell on their own merit. This suggests these cars aren’t very popular. That is not going to be good for resale value.
I think I’m making an argument that buying a new EV is a bad financial decision, regardless of how you pay for it. 😉
0% financing just gives you the option to make money on the money you otherwise would have used for a down payment/cash purchase. It has to be used responsibly like any other financing, but it’s arguably the least bad way to pay for a car if you can.
And to be clear, you’d have to pay me to take an ID.4. I wouldn’t actually touch this particular “deal”.
Don’t the interior issues apply to basically all VWs now? It seems VW realizes people hate the trend but have no interest in reversing course.
There’s also a gateway module that is famous for breaking. When that module breaks, the entire car freaks out and you need to have VW replace it under warranty. What about when its out of warranty as the 6 year loan definitely suggests? Pay a couple hundred dollars only for the module to break a few months later. It’s a common issue and my local VW dealer says they replace about 15 a month. That’s also assuming they have the part in stock too. The issue cannot be avoided and it will impact everyone during the vehicle lifetime. https://www.vwidtalk.com/threads/gateway-module-replaced-icas.8506/
https://www.reddit.com/r/VWiD4Owners/comments/14sth5u/2023_id_4_pro_s_towed_to_dealer_and_may_take/
This gateway module sounds like a callback to VW ignition modules.
I appreciate the continuity.
I mean, there’s a learning curve to the Tesla Y too. All I want is an affordable, normal car, that happens to have an EV drive train.
Friend of mine has a Kia Niro EV, doesn’t really have a learning curve, it’s normal, it happens to have an EV drivetrain. I hear the same thing about the Equinox EV if you don’t want to go Korean.
There are options out there that don’t have stupid decisions built in.
I’ve said it before and I’ll say it again, but I think VW made a mistake not just shipping the Skoda Enyaq to US and swapped VW badges. It’s after all same car as ID4, sans all the gripes. And overall better interior and bigger trunk.
The problem with this deal is that at the end you own an id.4
I’m not sure what’s going on with VW’s interior design team but they screwed up things I didn’t think were still possible to screw up.
I’m going to guess that the catch is that it’s a Volkswagen?
Their reliability with Ice cars over the last 15ish years has been terrible, so I can only imagine what something like this would be
My friends who continue to support VW are so delusional, they have their cars rusting (quicker than anything else), the poorest interior materials, suspension cluncks and rattles from new, etc. I mean, congrats on them for still being able to sell cars and convince these people that ‘German engineering’ is superior.
They used to be great honestly, but my 2011 has some issues. I can’t imagine paying actual money for a new one
Oh ya, my buddy’s 2003 Jetta made it to like 400,000 klms. He was so impressed that he bought another (new) one after that one died, I’ve never seen a vehicle with such a difference in quality between generations. Many moons ago, they did used to be good.
Are you sure you’re not talking about me? Hahaha I had a 2001 Jetta I could tell the same story about, that car was amazing, zero issues, tight as a drum for 9 years. Only reason I don’t still own it today was because someone crashed into it and totaled it
I think the difference is now he is no longer a VW fan (same reasons I’m not a modern BMW fan anymore). From my experience, german cars are built to be leased for 3 years, not owned for 10. Hope you have moved onto something reliable!
Nope, still in the VW. It’s good in a lot of ways, I’ve learned a pretty amazing amount about how to work on cars. My wife moved on to a Mazda, and that’ll be my next stop once this thing finally dies.
Fair enough, I had a 2015 Mazda3 hatch that I bought over the Golf (better price, N/A engine, more features, better interior materials, etc) but the gearbox needed to be replaced under warranty (97,000klms). It was the first car I owned where I wished I had the auto instead. I genuinely liked that Mazda, minus that massive issue lol. Other than that, great car.
I’d still only lease this thing. VW has a lot of good APR offers and cash on the hood if you take standard apr. The ID4 is not something I’d want to own long term given the tech. But a lease for a few years – maybe. I’ve seen deals on these for under $400 a month no money down. That’s a better bet, because I would guess these depreciate 50% shortly after driving them off the lot.
Hyundai may have better deals than that on their EVs.
Unfortunately, you have to go to a Hyundai dealer to get them. I signed papers on an in-stock Ioniq 5 ten days ago. I have yet to see the vehicle in person.
The dealership is a clown car of special people. I wish them happy lives, but I never want to see or deal with any of them again.
Wow, that’s Tesla-level bad. I had a bit of a rough go with Tesla that finally ended abruptly when they got around to delivering my car. Love the car but their lack of communication wasn’t good.
Communication is great. They contact me daily to confirm their continued failure.
If I were looking for a new friend, the transaction would have been great. Unfortunately I was looking for a car, and that transaction has not been great.
Ouch! What is their holdup? They waiting for the approval of the Hyundai chairman?
Their systems are compromised by the ransomware thing. So I went in person, signed everything on paper Saturday. Then since they couldn’t submit their registrations to the registry electronically they just sent someone over with a pile of them on Wednesday. They could have paid a guy to sit in line and run the plates through individually, instead they submitted a batch of these things the day before a holiday.
I could buy a car this afternoon and have new plates on it by dinner time. If I knew they were this useless, I would have insisted on running my own paperwork.
I also just got an email from someone at the dealership with Ioniq 5 lease offers for this month.
A monkey / football comparison would be unfair to both monkeys and footballs.
What a mess! Hope it straightens out soon and you get your Ioniq 5!
I’ve already unloaded on the sales child I dealt with and his boss. I never got personal or abusive, but made my disappointment clear.
At this point I’m not answering their calls because I take no pleasure in kicking this kid around. The mistakes were in his building but not under his control.
In my mind I’ve already given them until next Saturday since picking it up before then would be inconvenient and it’s literally a 4th car for a two driver household. I’m afraid I’d let that slip out on the phone and I don’t want to let him off the hook just yet (I also don’t want to abuse the guy).
I have redirected my energy towards Hyundai corporate. I figure they’re the ones that can lean on the dealer for operations procedures causing customer complaints.
“clown car of special people” – Excellent. I full on guffawed when I read that.
I had to censor myself like 5 times. I’m still a bit hot about this.
I totally get you. I was a bit irked by Tesla’s lack of communication. At least stuff got done. They just never bothered telling me what I needed to help with. An issue came up that a 30 second phone call or text message would have taken care of. Luckily I have friends who work in auto-adjacent fields who knew what to do. It took my friends 30 seconds to explain.