Killer 0% APR Deals Harder To Find This Memorial Day

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Senior Pricing Analyst

As CarsDirect’s resident pricing analyst, Alex offers must-know analysis of pricing & incentives to those looking to buy or lease a car. His consumer-oriented coverage of the latest trends and breaking news has been featured in publications such as Car and Driver, Motor Trend, Automobile Magazine and Autoblog.

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, Senior Pricing Analyst - May 18, 2021

Editor's Note: Shortly after publishing this article, we learned that today Jeep canceled its best deals before Memorial Day. As a result, shoppers may not be able to rely on automakers to even continue offering current incentives.

The odds of a consumer scoring 0% financing on a new car or truck are down sharply ahead of Memorial Day, according to a recent report from Cox Automotive. The findings affirm our earlier analysis that buyers will find fewer deals ahead of the holiday later this month after half a dozen manufacturers curtailed incentives.

In a market overview published today, Cox Chief Economist Jonathan Smoke stated that the share of financing offers featuring a rate of 0% has fallen to 7.6% so far in May. That's down from 9.9% of offers a month ago and well below the 21.3% peak that the company recorded back in April 2020 around the start of the pandemic.

A little over a year ago, we found that almost a dozen brands offered 0% APR for 84 months. At one point, you could snag interest-free financing for 7 years on a new Maserati. Similarly, deferred payment offers promising no payments for up to 6 months quickly evaporated last year and remain practically non-existent so far in 2021.

As we've noted recently, this shift in offers follows shrinking dealer inventory levels due to a global chip shortage that has been resulting in higher prices in the new car market as well as record-high trade-in values. This could have some consumers weighing the pros & cons of whether or not now is the time to replace a vehicle.

Cox notes that the overall share of 0% APR incentives is still higher than pre-pandemic levels but declining. While financing offers from brands like Toyota and Chevy are a lot worse compared to last month, automakers like Dodge and Jeep are bucking that trend by offering some of the best 0% APR deals on the market.

For example, Jeep is offering 0% APR for 84 months on popular vehicles like the 2021 Cherokee. That can actually make the monthly payment on a $30,000 Cherokee over $110 cheaper than that of a $30,000 Toyota RAV4. The RAV4 offers a rate of 3.9% for 72 months based on current deals here in Southern California.

While 84-month loans aren't for everyone, there are certainly cases in which longer loans can save buyers money. Another key downside is the fact that promotional financing often can't be combined with the biggest car rebates. We recommend comparing offers but being aware that these incentives have been on the decline.

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, Senior Pricing Analyst

As CarsDirect’s resident pricing analyst, Alex offers must-know analysis of pricing & incentives to those looking to buy or lease a car. His consumer-oriented coverage of the latest trends and breaking news has been featured in publications such as Car and Driver, Motor Trend, Automobile Magazine and Autoblog.

Follow On: Twitter

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