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Updated on Wednesday, February 20, 2019
Zero-percent financing sounds like a great deal on paper — who wouldn’t want an interest-free loan? You may see these types of loans advertised by automakers and dealerships alike. But as the saying goes, sometimes things are too good to be true. If you’re thinking about financing a new vehicle and are hoping to snag one of those 0% APR car deals, here’s what you should know.
What’s the catch?
When you see an offer this good, some are automatically wary that there’s a hidden catch. But for those with the highest credit scores, there may not be one. It’s certainly not impossible to get one of these loans, but that doesn’t mean that they’re available to everyone, nor are they always available for exactly the car you want. The fine print is the key to these offers — here’s what to look for.
- Not everyone is eligible: Buyers generally need to be “well-qualified” or “very well qualified.” This relates to credit scores, though automakers usually don’t give a specific number. If you’re not sure what your credit score is, here’s how you can find out, free.
- 0% APR car deals are harder to find than ever: When Edmunds compared 0% financing offers in August 2018, it found them cut in half compared with such offers in August 2016.
- They’re not available on every vehicle, all the time: Zero-percent financing offers tend to come and go. They’re generally only available for certain vehicles of a brand’s lineup for a limited time. You might get lucky and find that the car you want is offered with this financing deal exactly when you’re looking to buy. Still, the chances of the stars aligning could be slim.
- These offers have strict time frames: Say you start shopping late in the month and find one of these offers available. You might not be ready to buy by the time the offer is slated to expire at the end of that month. Such deals may be offered more frequently at certain times of the year, generally during August and September. Don’t make an impulse purchase just to get the best deal — you might get a better deal by researching other types of incentives, including cash rebates or discounts, which we’ll discuss in a minute.
- Short loan terms: Yes, it may be zero percent, but for how long? Many such offers are for relatively short terms — 36 months is a typical term we saw recently for such offers. Shorter loans terms may mean bigger monthly payments, but on the plus side, you’ll pay less in interest over time.
How can you qualify for 0% APR car deals?
- Be one of those qualified buyers: The key to 0% APR car deals is generally good credit. Buyers with higher credit scores tend to get better rates, and this offer is no exception.
- Don’t have a perfect score? There’s still hope: Edmunds notes that there could be possible exemptions for those with a stellar history of making car payments or who have been exceptionally brand loyal.
- Be one of the first to get the offer: Kia and Hyundai put in their fine print that quantities or the availability of this deal are limited. Read the fine print for your offer or check with your local dealership to see if these offers are still available.
0% vs. cash bonus: Which one is better?
As we mentioned earlier, you might have the option to choose between zero-percent financing and a cash bonus. It’s worth doing the math to see which one is actually worth more — it could be that the cash bonus saves you money even if you pay a few percentage points for financing. You may still be able to get a low APR, if not zero, and get a cash bonus.
What if you get denied for 0% financing?
If you get denied for 0% financing, don’t worry — there are plenty of other offers out there. In fact, there are lots of options out there that aren’t from a dealership or car manufacturer. Even if you think you qualify for 0% APR car deals, it’s in your best interest to shop around for a loan before you try to purchase a car. Walking into the dealership with a pre-approved auto loan can help you be sure you’re getting the best deal. That way, you’re not paying the dealership a markup price to handle your financing, which could save you money.
Start by getting pre-approved with LendingTree, our parent company.
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LendingTree is our parent company. LendingTree is unique in that they allow you to compare multiple, auto loan offers within minutes. Everything is done online. LendingTree is not a lender, but their service connects you with up to five offers from auto loan lenders based on your creditworthiness.
Advertised rate is for new and used auto loans for 36 month term.
0% financing is great, but don’t depend on it
If you can get 0% financing, congrats, you just got to borrow money for free! If you didn’t snag one of these elusive deals, know that you’re probably not alone. Always be sure to read the fine print before you get your hopes up, and check with your dealership to see if the offer is still available. If you’ve done your auto loan shopping properly, you’re probably aware of other affordable finance offers out there. To find more auto loan offers, see MagnifyMoney’s top picks for the best auto loans and see what’s available to you.