0 Percent Car Loan Approval Odds Increase Due to COVID-19

Get Car Financing
Even with poor credit.

By

Contributing Writer

Bethany Hickey is a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. She is a content writer for Auto Credit Express, CarsDirect, and many other automotive blogs, as well as the Poetry Editor for UM-Flint’s writing magazine.


, Contributing Writer - May 19, 2020

Automakers are trying harder to move some cars off dealer lots due to state-wide shutdowns as a result of COVID-19, and many are offering zero-percent financing for some models. While these deals are usually only offered to those with good to great credit, some borrowers with bad credit are also being approved for these great deals.

Subprime Borrowers and 0% Financing

As a rule of thumb, subprime borrowers (generally classified as those with credit scores below 660) typically don’t get approved for new car deals with 0% financing. If you were to apply with bad credit for a zero-percent APR new car loan, you’d typically have very little chance of getting approved. However, in some cases, the tide has turned in your favor due to the coronavirus.

In a recent survey by J.D. Power, it was reported that borrowers with credit scores above 740 made up 70.34% of approvals for new vehicles, 0%, 84-month financing. While the majority of loans went to good credit borrowers, there was an uptick of bad credit buyers getting approved for zero-percent financing, with about 4% of borrowers with a credit score below 620 got approved for 0% financing for an 84-month auto loan.

Four percent doesn’t sound like much, but borrowers with a subprime credit score usually have little to no chance of qualifying for a zero-percent interest rate. If you’re a bad credit borrower and you’ve wanted to take advantage of 0% financing and other great car deals, now may be the time to apply.

Automakers Rolling Out Deals

Since the coronavirus has slowed auto sales, carmakers have been offering some great deals on new vehicles. As a bad credit borrower, you may not get approved for a luxury car or by every captive lender, but the data suggests that some lenders are more willing to work with buyers with less than perfect credit due to recent events.

At CarsDirect, our team has been continually updating a list of automakers that are offering zero-percent financing, deferred payments for new customers, or a combination of both:

  • BMW and MINI
  • Chrysler, Dodge, Jeep, and RAM
  • Ford and Lincoln
  • Chevy, Buick, GMC, and Cadillac
  • Honda and Acura
  • Hyundai and Genesis
  • Jaguar and Land Rover
  • Kia
  • Mazda
  • Mercedes-Benz
  • Nissan and Infiniti
  • Subaru
  • Toyota and Lexus
  • Volkswagen and Audi
  • Volvo

Odds of Approval and Other Lending Options

Getting approved for a brand new car is one thing, being able to manage the payments is another. New vehicles tend to have lower interest rates, but higher payments due to high sticker prices.

Captive lenders are going to ask about your monthly income. While some are becoming more flexible regarding their credit score requirements thanks to recent events, you’re still going to need to have enough income to comfortably pay the auto loan. If you’re not quite ready for the high sticker price of a new car, but you still need a vehicle, subprime financing could be for you.

Subprime lenders work through a dealership’s special finance department, and the finance manager works on the lender’s behalf. These lenders specialize in working within a borrower’s budget, tailoring a monthly car payment that fits their income. You’re still going to need a stable income and living situation, but the loan is set up so you can repay it successfully.

A subprime auto loan isn’t going to come with 0% financing, but with the loan, you can work to repair your credit score to help qualify you for better deals in the future.

Get Connected to a Dealership

With bad credit, it can feel like you have nowhere to get auto financing. However, there are subprime lenders all over the country, and we know where they are.

Here at CarsDirect, we have teamed up with these dealerships and we connect borrowers to them for free. To get started and get matched, fill out our free auto loan request form. Your next step in your car shopping journey could start today!

Free Credit Score

Get your free credit score now! Get a copy of your most recent credit score.

Get Your Free Score

Auto Insurance

Get competitive quotes on insurance in your area.

Sell Your Car

We will buy any car, running or not, with or (in most cases) without the title.

Get My Price

Need a Car Loan?

It only takes a minute.

, Contributing Writer

Bethany Hickey is a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. She is a content writer for Auto Credit Express, CarsDirect, and many other automotive blogs, as well as the Poetry Editor for UM-Flint’s writing magazine.


Search New Cars by Loan Payment »

View estimated loan payments based on local rebates and financing offers.

Loan approval is not guaranteed and is subject to credit application and approval of the lender. Individual loan terms may vary. Use of this website constitutes acceptance of CarsDirect.com's Terms of Use, Disclaimer, Privacy Policy, and Cookie Policy.

Privacy Policy|Do Not Sell My Personal Information|Terms of Use|Cookie Policy|Disclaimer
COPYRIGHT 1999-2020 MH Sub I, LLC dba CarsDirect.com