Typically, these companies will speak with you about your vehicle preferences and then connect you with local dealers willing to offer loans to customers with poor credit, often with no upfront payment. This means that you can buy a new car, even if you have a 500 credit score. There are a few companies that work with dealerships that specialize in subprime lending. However, if you have poor credit you still have options. These deals are reserved for borrowers with prime or super-prime credit. You are unlikely to qualify for a zero percent auto financing offer with a credit score less than 700. Can You Get Zero Percent Financing With Bad Credit? However, you'll typically need at least a 700 credit score and a score above 720 will give you a better chance of being approved. Lenders rarely advertise the minimum credit score to be eligible for 0% financing. What Credit Score Do You Need to Get 0% Financing?

Typically, you’ll need to have excellent credit, but you must look carefully at the advertised deals to know what the qualifications are. In most cases, low APR loans have strict requirements that can be difficult to meet. A better approach to is focus on negotiating the sales price of the used car you want and then get competitive financing from a bank or credit union. Occasionally, a dealership will advertise a no-interest deal on a used vehicle, but these are very hard to find. One exception is Volkswagen, which has been running 0% APR financing for 60 months on their CPO (certified pre-owned) during the COVID crisis.

Typically, this type of incentive is only offered on new cars. Can you Get Zero Percent Financing on Used Cars?Ġ APR used car deals are rare, but not unheard of. Learn more about choosing between low APR or cashback. And sometimes the catch is that the low APR may only apply up to a certain amount requiring you to make a bigger down payment else pay a higher APR for anything above the limit.Īdditionally, you can often only choose either 0 APR OR cashback, not both. Once the dealer gets you in the door with the zero APR loan offer, you may find that it’s more of a bait-and-switch, with the offer only applying to very specific models and packages that have limited stock available.ĭealerships can offer zero interest car loans because they make money on the sale in other ways, like a higher car price, or add-ons in the Finance Office with things like gap insurance or extended warranties. While 0% APR loans can be a good deal, there’s also a catch to consider. What’s the Catch With Zero Percent Car Loans? Dealers aren’t offering 0% APR out of the kindness of their hearts, so you can expect there to be special restrictions like that rate only applying to certain models or charging car buyers heavily on other things like add-on products and extended warranties. On the surface, the longer you can get 0% APR, the better.īut there’s always a catch. Long loan terms typically require a higher interest rate since that’s how lenders make their money, which leads to a long-term loan ultimately costing thousands more in the end.īut what about those long loan terms that offer 0 percent financing for 72 months or longer? If you read the fine print, you'll realize that most zero APR offers will require you to be a well-qualified buyer with excellent credit and you cannot combine with other offers. Is 0% A Good Deal?Ġ% APR offers can save you thousands of dollars in interest payments over the life of the car loan, but you should be wary of the reason the dealer is offering them. If we applied the average APR of 4.96%, the monthly payment on the vehicle rises to $678 a month, or $4,700 in interest payments over 60 months. The average price of a car is around $36,000 and with 0% financing over 60 months, monthly payments come out to around $600. Is 0% APR Worth It?Ġ% APR financing can save you a lot of money on your car purchase since you're not paying any interest on the car loan. 100% of every payment you make will be applied to your loan principal. If a dealership offers a promotional 0% APR loan, they are waiving their loan fees and interest as an incentive to get you to buy a car. The higher the APR, the higher your monthly payment. The annual percentage rate (APR) is the percent of all your payments over a year that goes towards interest and fees. These fees are factored into your monthly payment and spread out across the life of the loan. When you get a car loan from a dealership or lender, they make their money by charging you interest and loan fees. 0 APR or zero percent financing means you pay no interest on your monthly auto loan payments which can add up to thousands of dollars saved.

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