How to Get a 0% APR Car Loan

You see the advertisements on television and hear them on the radio promoting the financing deal of a lifetime on a new car. While zero-percent interest on a car loan may sound appealing, it’s important to understand how these deals work, qualification criteria, and where to find them.

woman financing a car

Exploring 0% APR Auto Loan Financing

0% APR auto loan financing is a strategy used by auto manufacturers to attract customers to specific vehicle models. These enticing offers are typically designed to boost sales of certain makes and models, often those in high demand or with a surplus inventory. The catch? You’ll usually need to secure financing directly through the manufacturer’s financial services to take advantage of these deals.

The major draw of 0% APR financing is clear: significant savings. By forgoing interest, you effectively reduce the overall cost of your vehicle. Each payment you make goes directly towards paying off the principal amount of the loan, meaning you could potentially save thousands that would have otherwise gone towards interest.

Dealer-Specific 0% APR Offers: A Closer Look

Diverging slightly from manufacturer deals, some car dealerships create their own zero-percent financing options. These dealer-specific offers often work differently. Here, the dealership opts to absorb the interest costs associated with the car loan. Essentially, while you’re technically being charged interest on the loan, the dealership compensates for these charges, allowing you to enjoy the benefits of a zero-percent deal.

This dealership approach to 0% APR deals offers a distinct advantage: more variety in vehicle choices. Unlike manufacturer-specific deals that focus on specific models, dealer offers might encompass a broader range of cars, potentially including various makes, models, and even used vehicles. However, it’s important to scrutinize these deals closely, as they may come with different terms or conditions compared to traditional manufacturer-sponsored 0% APR offers.

Pros and Cons of 0% APR Financing

Zero-percent APR financing is an attractive option for many car buyers, offering the chance to finance a new vehicle without the added cost of interest. However, like any financial decision, it comes with its own set of benefits and drawbacks. Understanding these can help you decide if a 0% APR deal is the right choice for your situation.


  • Interest savings: The most obvious benefit is the absence of interest, which can save you thousands of dollars over the life of the loan compared to traditional financing options.
  • Simplified budgeting: Without the variable of interest, calculating your total expenses becomes straightforward, making it easier to budget for other expenses.
  • Faster equity building: Since all your payments go directly towards the principal, you build equity in your vehicle faster, providing financial flexibility in the future.


  • Strict qualification requirements: These deals are typically reserved for buyers with excellent credit scores, limiting accessibility for a significant portion of potential buyers.
  • Limited negotiation room: Dealerships offering 0% financing may be less willing to negotiate on the price of the vehicle, as they’re already forgoing profit made from loan interest.
  • Reduced flexibility on terms: 0% APR deals often come with fixed loan terms, which might not fit everyone’s financial situation. Additionally, the selection of eligible vehicles may be limited, potentially steering you away from the car you want.
  • Opportunity cost: Opting for 0% financing might mean missing out on other incentives, such as cash rebates, which could be more valuable depending on the purchase price and loan terms.

How to Qualify for 0% Interest on an Auto Loan

Securing a 0% interest auto loan can feel like hitting the jackpot in the world of car financing, but it’s important to know that these deals are not accessible to everyone. They often come with specific qualifications, primarily revolving around your creditworthiness. Let’s break down what it takes to qualify for these enticing deals and explore some strategies if you’re not quite there yet.

Understanding the Credit Requirements

First and foremost, your credit score plays a pivotal role. Generally, to be eligible for 0% APR deals, you’ll need an excellent credit score, often around 680 or higher. This score is a reflection of your financial reliability, and lenders view it as a gauge of your ability to repay the loan without issues.

Tips to Improve Your Credit Score

If your credit score isn’t quite in the ‘excellent’ range, don’t lose hope. Here are some effective ways to boost your score:

  • Pay bills on time: Consistency in paying bills, including credit cards, loans, and even utility bills, is imperative. Late payments can significantly hurt your credit score.
  • Reduce debt: Lower your credit utilization ratio – the amount of credit you’re using compared to your credit limit. Aim to keep it under 30%, as lower ratios are favorable for your credit score.
  • Avoid new credit applications: Each time you apply for credit, it can slightly lower your score. Try to minimize new credit inquiries, especially in the months leading up to your auto loan application.
  • Check your credit reports: Errors on your credit report can unfairly drag down your score. Regularly review your reports from the three major credit bureaus and dispute any inaccuracies.

Alternatives if You Don’t Qualify

Not everyone will qualify for 0% APR auto loan financing due to stringent credit requirements. If you find yourself outside the eligibility criteria, there are still several viable paths to secure financing for your new car.

  • Explore competitive interest rates: Start by looking for the best auto loan rates available from various lenders. While you may not secure a 0% offer, there are still low-interest options out there that can fit within your budget.
  • Use prequalification tools: Online lenders offer prequalification tools that let you see what rates you might be eligible for without affecting your credit score. This step can give you an idea of what financing you might receive and help you compare offers effectively.
  • Consider a co-signer: Having a co-signer with a strong credit profile can significantly increase your chances of approval for a loan with better terms. This person agrees to take on the responsibility of the loan if you’re unable to make payments.
  • Seek help from credit unions and community banks: These institutions often provide more personalized service and may have more flexible lending criteria compared to big banks. Credit unions, in particular, are known for offering competitive rates to their members.
  • Auto finance companies and online auto lenders: If traditional banking routes don’t pan out, consider auto finance companies and online lenders. They frequently have products tailored for individuals with less-than-perfect credit histories.
  • Larger down payment: If possible, save for a larger down payment. This reduces the loan amount and may help you secure a loan with better terms, as well as lower your monthly payment.
  • Improve your credit score: If you’re not in a rush, take time to improve your credit score. Paying bills on time, reducing your debt, and correcting errors on your credit report can all help boost your score over time.
  • Refinance your auto loan: If you end up accepting a higher interest rate, consider refinancing your auto loan after your credit score improves. Refinancing can lower your interest rate and reduce your monthly payment.

While securing a 0% interest auto loan requires excellent credit, there are practical steps you can take to improve your credit score and alternative strategies if you currently don’t qualify. With careful planning and financial management, you can position yourself more favorably for these attractive financing options.

How to Find 0% APR Interest Deals

Uncovering the best 0% APR car loan offers requires a multifaceted approach. Beyond the standard searches on manufacturer websites and local dealership promotions, consider expanding your search to include various resources to ensure you’re getting the best deal possible.

Financial aggregator websites: Utilize these sites to quickly view a range of financing offers from different sources, including elusive 0% APR deals.

Online car forums and enthusiast sites: Tap into the collective knowledge of car enthusiasts for advice on current deals and tips on securing favorable financing.

Social media and automotive blogs: Follow auto brands and finance experts for updates on promotions and financing tips.

Banks and credit unions: Inquire about special auto financing deals available through your financial institution, which may offer competitive rates.

Auto shows and sales events: Keep an eye on special events for exclusive financing offers not available elsewhere.

Subscribe to newsletters: Get direct updates from manufacturers and dealers about new promotions, including 0% financing options.

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How to Apply for a 0% Interest Auto Loan

Applying for a no-interest car loan is the same as applying for any other car loan. You’ll need to complete an in-house financing application, either online or on-site, that includes information about your income, and consent to a credit check.

But before applying for a loan, you should:

Get a Copy of Your Free Credit Report

Doing so will give you an idea of where you stand so you won’t be caught off guard when applying for an auto loan. Keep in mind that the credit score lenders see may be different. Furthermore, if your credit scores are on the lower end of the spectrum, it may be worthwhile to work on improving your score before applying.

This guide shows you how to get a copy of your free credit report from each of the three major credit bureaus. And if you don’t know how to find your credit score, this guide provides additional guidance.

Shop Around for Additional Financing Offers

Shopping around gives you other low-interest financing options in case you are a few points shy of the minimum credit score for zero-percent financing. You’ll also have bargaining power, as the dealer will try to undercut other offers on the table to get you the best deal and earn your business.

And don’t worry about your credit scores taking a hit from multiple applications. According to myFICO, auto loan applications made within a 30-day window only count as a single inquiry if you find a loan that suits you within this period.

Evaluate 0% Financing Against Other Incentives

If there’s bonus cash back or a rebate, you may get more from those deals than zero-percent financing. And also consider the cost-savings that could be incurred from refinancing the loan.

To illustrate, assume you’re purchasing a vehicle for $20,000, but will only borrow $15,000 (this amount includes taxes and registration fees) due to $5,000 down payment.

Because of your strong credit history, the dealer has given you the option to pay no interest over the life of the loan. You can also forgo this opportunity to receive $1,800 in bonus cash, but you’ll have to pay interest of 2.99% over the 4-year loan term.

Here’s how the numbers play out:

Option oneoption two
Monthly payment$313$332
Interest rate0%2.99% with $1,800 in
bonus cash from the dealer
Interest paid over
life of loan
Total amount paid
for vehicle

In this case, option two would be the best choice. Despite paying $934 in interest over the life of the loan, you’ll still walk away with $866 because of the bonus cash ($1,800-934).

Key Considerations Before Signing a 0% Financing Deal

When it comes to securing a car loan, particularly those with a tantalizing 0% interest rate, it’s vital to look beyond the surface. Sales personnel may steer the conversation towards an attractive monthly payment, overshadowing the overall financial commitment you’re making. The allure of low monthly payments can obscure the true cost of your vehicle over time.

Focus on the Total Cost, Not Just Monthly Payments

The total amount you’ll pay for the car encompasses more than just the sticker price. It includes the sum of all your payments across the life of the loan, accounting for both the principal and any interest (if you’re not opting for a 0% deal). Prioritize discussions on the total loan repayment amount to ensure a comprehensive understanding of your financial obligation.

The Advantage of Making a Down Payment

Contributing a down payment, even when not mandated by the lender, can be financially advantageous. It reduces the borrowed amount, thereby diminishing the impact of vehicle depreciation. A substantial down payment ensures you owe less than the car’s worth sooner, providing a safeguard should you choose to sell the vehicle before the loan term ends.

Opt for Shorter Loan Terms

While longer loan terms might offer the appeal of smaller monthly payments, they also mean paying more over time, especially if your loan carries an interest rate. Shorter loan terms reduce the duration of payments and typically lead to less spent on interest, mitigating the depreciation effect on your investment.

Be Wary of Upsells and Add-ons

Dealerships often boost their margins by offering additional features, services, or warranties, especially in the context of 0% financing deals. While these extras might seem beneficial or relatively inexpensive at first glance, they can significantly inflate the overall cost of your vehicle. It’s wise to assess the necessity and cost-effectiveness of these add-ons, as they might be available at a lower cost elsewhere.

See also: How to Finance a Car in 5 Easy Steps

Bottom Line

Financing a car at 0% APR is more accessible than many think, offering a clear path to savings on interest. If you’re diligent in your search and fully understand the terms, securing such a deal can significantly reduce the total cost of owning a new car.

While the benefits are clear, including reduced overall expenses and simplified budgeting, keep in mind that these offers are typically reserved for buyers with excellent credit scores.

For those whose credit doesn’t meet the mark, improving your credit score or considering alternative financing options remains a viable path to achieve similar savings.

As you explore these deals, balancing the lure of 0% financing against other available incentives ensures that you make the most informed decision for your financial situation. Ultimately, with the right preparation and understanding, you can drive off the lot in your new car, confident in the financial choice you’ve made.

Frequently Asked Questions

What is 0% APR car loan?

A 0% APR car loan is a car loan with an interest rate of 0%. These loans are typically offered by auto manufacturers as a limited-time promotion to encourage customers to purchase their vehicles. They can be beneficial for those who can pay off the loan within the promotional period, as no interest is charged.

Who offers zero interest car loans?

Zero percent APR financing is an attractive financing offer that allows a customer to borrow money without paying interest. This type of financing is often offered by captive finance companies that are owned by the same organization that manufactures or distributes the product being purchased.

Captive lenders include:

  • BMW Financial Services
  • Chrysler Capital
  • Ford Motor Credit Company
  • GM Financial
  • Honda Financial Services
  • Hyundai Motor Finance
  • Kia Motors Finance
  • Infiniti Financing
  • Lexus Financial Services
  • Mercedes-Benz Financial Services
  • Nissan Motor Acceptance Corporation
  • Subaru Motors Finance
  • Toyota Financial Services
  • Volkswagen Credit

How much can you save with a 0% APR auto loan?

With a 0% APR auto loan, you can save the entire amount of interest that you would otherwise have to pay on the loan. Depending on the amount of the loan, this can amount to hundreds or even thousands of dollars in savings.

Can I get a 0% APR car loan with bad credit?

Most 0% financing deals are typically reserved for borrowers with excellent credit. It’s very difficult to qualify for an interest-free financing program when you have bad credit. However, there are steps you can take to improve your credit score and potentially get a lower rate.

Allison Martin
Meet the author

Allison Martin is a syndicated financial writer, author, and Certified Financial Education Instructor (CFEI). She has written about personal finance for almost ten years and holds a master's degree in Accounting from the University of South Florida.