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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