What is 0% Financing?

Get Car Financing
Even with poor credit.

By

Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.


, - September 14, 2018

Zero percent financing means that a borrower can finance a car without paying any interest charges on the loan. It sounds too good to be true, but is it even possible?

What 0% Interest Means

It’s important to know the basics of car loans when you look at zero percent financing. When a car buyer takes out an auto loan, they’re borrowing money from a lender to pay for the car. In order to finance the vehicle, the borrower must pay the lender a fee in order to use their money. This fee is known as interest, and is expressed as a percentage rate.

The interest rate you're able to qualify for depends on your credit score. Generally speaking, the higher the credit score, the lower the interest rate. Therefore, how much interest charges you end up paying has a lot to do with your credit score, and financing a car is typically less expensive when you have good credit.

How Do I Get 0% Financing?

Qualifying for zero percent financing is difficult if your credit score isn’t very good. Even though car dealers advertise zero percent financing, reading the fine print at the bottom of the ad reveals that this interest rate is reserved for “well qualified” borrowers – those with excellent credit. As a result, even borrowers with good or fair credit typically find themselves being turned down for a no interest auto loan.

At the same time, borrowers with poor or bad credit have very little chance of qualifying for zero percent financing. These subprime borrowers typically only qualify for loans with higher than average interest rates to compensate for their lower credit scores.

Ready to Finance?

Unless your credit is excellent, the likelihood that you qualify for zero percent financing is slim to none. At the same time, subprime borrowers have to face the reality of higher than average interest charges.

If you’re looking for your next loan, but aren’t sure where to start, let CarsDirect lead the way. We connect consumers to dealerships that have the resources to assist car buyers in many types of credit situations. Start the process by filling out our auto loan request form today.

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.


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