Buying a car is expensive. So when you see “0% APR financing” in big bold letters, it’s easy to think you’ve found the perfect deal. After all, if you’re not paying interest, you’re saving money—right?
In many cases, yes. But these offers are designed to attract attention, not necessarily to save you the most money. You’ll need excellent credit to qualify, and sometimes the rebate you give up is actually worth more than the interest savings.
This guide breaks down what a 0% APR car loan really means, how to qualify, who offers these deals in 2025, and how to know if it’s actually the best financial move for you.
What is a 0% APR car loan?
A 0% APR car loan lets you finance a vehicle without paying any interest. Every dollar of your monthly payment goes straight toward the loan’s principal—no extra charges added over time. This can save you hundreds or even thousands compared to a standard auto loan.
So what’s the catch? These offers are usually tied to specific car models, limited-time promotions, or certain buyers. They’re often only available through the automaker’s own financing arm—not your local bank or credit union.
Manufacturers use these deals to move inventory quickly, especially if they’re trying to hit quarterly sales targets or clear out last year’s models. Dealerships sometimes offer similar promotions, but they might structure them differently—like raising the vehicle price or restricting who qualifies.
Most 0% APR loans come with shorter terms, like 36 or 48 months. You may find a few that stretch to 60 or even 72 months, but the longest offers tend to be limited to specific models or higher-credit borrowers.
Who Offers 0% APR Car Loans in 2025?
These interest-free car loans are usually offered by auto manufacturers through their in-house financing companies, often called “captive lenders.” These lenders exist solely to finance purchases of that brand’s vehicles.
Some of the most active providers of 0% APR deals include:
- Toyota Financial Services
- Ford Motor Credit Company
- GM Financial
- Honda Financial Services
- Hyundai Motor Finance
- Kia Motors Finance
- Nissan Motor Acceptance Corporation
- Volkswagen Credit
- Subaru Motors Finance
These offers are most common during seasonal promotions, especially at the end of the year or during new model rollouts. Some dealerships may advertise their own 0% financing offers, but always check the fine print. Independent dealer deals often involve trade-offs, such as a higher price tag or stricter terms.
If you’re not seeing 0% APR offers right now, don’t worry. These deals come and go. It’s worth checking manufacturer websites regularly or signing up for dealership newsletters so you don’t miss limited-time promotions.
See also: Best Auto Loans for Good & Bad Credit of [years]
How to Qualify for 0% APR Auto Financing
These deals aren’t available to everyone. To get a 0% APR car loan, you typically need a strong credit profile and stable income. Lenders want to see that you’re low risk and likely to repay the loan on time.
Most offers require a credit score of 680 or higher, and some aim for 700+. You’ll also need enough income to comfortably handle the monthly payment, especially if the loan term is short. Lenders may check your debt-to-income ratio to make sure your monthly obligations aren’t too high.
It’s also worth noting that even with a great credit score, approval isn’t guaranteed. Some promotions are limited to certain locations, models, or even buyers with specific purchase histories. If you’re shopping for a used car, 0% APR is usually off the table—these deals almost always apply to new vehicles only.
How to Improve Your Credit Score to Qualify
If your credit score isn’t quite high enough to qualify, there are steps you can take to improve it before applying for a car loan.
- Pay your bills on time: Your payment history makes up the largest part of your credit score. Even one late payment can hurt.
- Lower your credit utilization: Try to keep your credit card balances below 30% of your credit limits. The lower, the better.
- Hold off on new applications: Every time you apply for credit, it can cause a temporary dip in your credit score. Avoid new credit inquiries in the months leading up to your car loan application.
- Check your credit reports for errors: Mistakes on your credit report can unfairly lower your score. You can request your free credit report from all three major credit bureaus and dispute anything that looks wrong.
Making small improvements can help you qualify for better financing—or at least get a lower interest rate if you can’t secure 0% APR.
Pros and Cons of 0% APR Financing
A 0% APR car loan can look like the best deal on the lot—but it’s not always the right choice. Here’s a clear look at what works in your favor and what could end up costing you more.
Pros
- Interest savings: You don’t pay a penny in interest, which can save you hundreds or even thousands over the life of the loan.
- Faster equity: Since every payment goes toward your principal balance, you build equity in the car more quickly.
- Easier budgeting: Fixed monthly payments with no interest make it easier to plan your finances.
Cons
- Harder to qualify: These offers are usually limited to borrowers with excellent credit scores and strong income.
- Limited vehicle choices: 0% APR deals typically apply to select models, often with fewer trim or color options.
- Missed rebates: You may have to give up a cash rebate or other incentive to take the 0% offer. In some cases, that rebate could save you more overall.
0% APR vs Cash Rebates: Which Saves You More?
Sometimes, you’ll have to choose between 0% APR and a cash rebate. It’s not always obvious which one saves you more, but a quick example helps make the trade-off clear.
Let’s say you’re buying a car for $25,000. The dealership gives you two options:
- Option 1: 0% APR for 60 months
- Option 2: A $2,000 rebate with a 4.99% APR loan
If you choose the 0% APR, your total loan cost is $25,000—no interest added. If you take the rebate and finance $23,000 at 4.99% for 60 months, you’ll pay about $2,400 in interest. That wipes out the rebate and ends up costing you more overall.
But in other cases—especially with shorter loan terms or larger rebates—the cash may be the smarter move.
To compare offers:
- Use an auto loan calculator: Plug in the loan amount, interest rate, and term length for each option.
- Look at total cost: Don’t compare monthly payments—compare the total amount you’ll repay over time.
- Ask the dealer to run both scenarios: Most are happy to show you a side-by-side breakdown.
Alternatives If You Don’t Qualify for 0% APR
If you don’t meet the requirements for a 0% APR car loan, there are still plenty of ways to get a great deal—and possibly refinance into better terms later.
- Shop rates with banks, credit unions, and online lenders: Many offer competitive rates, especially to borrowers with good credit.
- Get prequalified: Prequalification tools let you check your rates without affecting your credit score. It’s a smart way to know what’s realistic before visiting the dealership.
- Use a cosigner: If someone with strong credit is willing to cosign, you could qualify for a lower interest rate.
- Make a larger down payment: This reduces your loan amount, lowers your monthly payments, and can help offset a higher interest rate.
- Improve your credit and refinance later: If you end up with a higher rate now, you can refinance once your credit score improves. Many lenders allow refinancing after six to twelve months of on-time payments.
How to Find the Best 0% APR Deals
These offers come and go quickly, so knowing where to look—and when—is key.
- Check manufacturer websites: Automakers like Toyota, Ford, and Hyundai regularly promote 0% APR deals on their websites.
- Look at dealership promotions: Local dealers often advertise their own financing specials, especially during sales events.
- Use auto loan comparison tools: Aggregator sites let you compare offers from multiple lenders, and some list 0% APR deals.
- Follow car blogs, forums, and social media: Car buyers often share tips and heads-up alerts about limited-time promotions.
- Time it right: The best deals usually show up at the end of the month, quarter, or year—especially when dealerships are trying to hit sales targets or clear out old inventory.
See also: How to Finance a Car in 5 Easy Steps
How to Apply for a 0% APR Car Loan
Applying for a 0% APR auto loan isn’t that different from applying for any other loan—but preparation matters.
- Check your credit reports and score: Request a free copy from all three credit bureaus, and see how to get your free credit score so you know where you stand before applying.
- Gather your income information: Lenders will ask for proof of employment or income to confirm your ability to repay.
- Get preapproved: Some automakers let you get preapproved online. This can help you lock in terms and speed up the buying process.
- Compare all offers: Even if you qualify for 0% APR, get competing quotes. Sometimes a low-rate loan with a rebate ends up costing less.
Preapproval also gives you more leverage with the dealership—you’re not locked into their financing, and they know it.
What to Watch Out For Before Signing
Even with 0% APR, the loan might not be as great as it sounds. Here’s what to keep an eye on.
- Add-ons and upsells: Dealers may push extended warranties, service plans, or accessories to boost profits. These extras can erase your interest savings.
- Loan length: Watch out for long loan terms that stretch beyond the vehicle’s value. Even with 0% APR, you don’t want to be upside-down.
- Total loan cost: Focus on the full amount you’re repaying—not just the monthly payment. A small payment over a long term could mean overpaying for the car.
- Fine print: Some 0% deals have hidden fees or eligibility restrictions. Ask for a full breakdown before you agree to anything.
If something feels off, step back. No deal is worth rushing into if it doesn’t make financial sense.
See also: What Is the True Cost of Owning a Car?
Bottom Line
A 0% APR auto loan can save you a lot of money—if you qualify and if it’s truly the best offer available. But these deals aren’t one-size-fits-all.
If you have excellent credit, a short loan term, and no better cash-back option, go for it. But if you have to pass up a big rebate or accept a car you don’t really want, it may not be the smartest choice.
The best deal is the one that saves you the most overall. Compare the total cost of every option, and don’t be afraid to ask questions or walk away. A little preparation goes a long way when you’re buying a car.
Frequently Asked Questions
Can I negotiate the price of the car if I’m using 0% APR financing?
Yes, but it may be harder. Dealerships offering 0% APR financing often have less flexibility on the vehicle price because they’re already giving up interest income. Still, it’s worth asking for discounts, especially if you’ve done your research or have a competing offer.
Does 0% APR mean no fees at all?
No. While you won’t pay interest, you could still face fees such as document prep, delivery charges, or add-ons. These fees don’t show up in the APR, so always ask for the full breakdown of costs before signing.
Can I pay off a 0% APR car loan early?
Usually yes, but check the loan terms first. Most 0% APR auto loans don’t have prepayment penalties, but some might limit early payoff options or include hidden fees. Always confirm with the lender or read the fine print.
Is 0% APR available for used cars?
In most cases, no. 0% APR financing is typically reserved for new vehicles. A few certified pre-owned models may qualify through specific manufacturer promotions, but it’s rare. Used car buyers usually need to shop for low-interest rates instead.
Will applying for 0% financing hurt my credit score?
Not if you plan carefully. Auto loan inquiries made within a 30-day window usually count as a single credit inquiry. If you’re rate shopping, try to submit all applications within that time frame to protect your credit score.
