0% Car Finance

0% car finance is something that many car manufacturers and dealerships use in their advertising as a tactic to lure people in to their car lots. While they do in fact make available 0% car finance terms to some people, most of the time a 0% car finance campaign is designed as a marketing tactic. Most people will have trouble qualifying for a 0% rate, and for the vast majority of car buyers a 0% car finance offer is something that is simply not feasible.

When a dealership advertises a 0% car finance offer they are typically only going to be able to make that kind of financing to people with good, to excellent credit. The standard minimum rate that most dealerships require so that they at least consider your application is around 700, although this can fluctuate a bit depending on the dealership. The higher your credit score, the better chance you’ll have at qualifying for the 0% car finance rate, and you must also be aware that even if you have a credit score above the required minimum, you still could be denied if you have any outstanding negative marks on your credit report such as late payments, default accounts, and bankruptcies. Knowing this as a potential car purchaser you should first obtain a copy of your credit report before getting too excited about a 0% car finance offer. First look at you score from the three major credit bureaus to see if it is at a level that will pass the dealership’s minimum required score. Next analyze your report to see if you have any negative marks within the last two to three years. You can still attempt to apply for the 0% offer with a good credit score and a couple of negative marks, just be aware that it could go either way when a final decision is handed down.

If you have looked at your credit and still think you can qualify for a 0% car finance offer then you must be aware that there are several other things you need to conscious of before you go into the dealership and apply. Understand that the 0% offers a dealership advertises are only for specific models of vehicles that are currently on the dealership’s lot. Often times, the advertisement itself makes a blanket statement that makes it sound like 0% financing is available for almost every kind of vehicle on the lot. This is very misleading, as not only will only certain makes and models be available for 0% offers, only vehicles that are typically already on the lot will be eligible for such offers. This means that even if you find a model that qualifies for the 0% offer, you won’t be able to request a different color, or other options if that model vehicle is not already on the premises.

When a dealership or car manufacturer makes a 0% offer usually it is stipulated in the fine print that if you accept the 0% offer, you will not be eligible for any available cash back rebates, or other incentives. In the dealership’s advertisements in can sometimes make it sound like both are available under all circumstances, and this simply isn’t true. You must take into consideration the overall money you will save over time with each kind of offer. Sometimes the 0% offer will give the best deal, and other times a cash back, or other incentivized offer will save the most money. Compare each offer side by side and you will then know what offer to choose.

For most 0% car finance offers, the 0% financing is only available for loans that run up to 36 months in duration. If you prefer to have a loan that will last 48 months or more you will typically be out of luck when it comes to the 0% offer. Understand that if you do decide to go with the shorter-term loan so that you can get the 0% financing, you will be paying more each month via your monthly payment.

You also need to be aware that a 0% offer might not run for the entire life of the loan. Sometimes the actual 0% interest rate is for only six to twelve months, and after this period has ended the loan’s interest rate can increase significantly without notice. Many people are completely unaware of this new rate, and find out after its too late. You also need to read the rest of the fine print within your loan documents as many times it states that if even one late payment is made, or some other term of the contract is violated the 0% rate can jump up to what is called the default rate. This default rate is typically very high, and it will then be the interest rate for the remainder of loan, and nothing you can do will get the 0% rate back.

0% car finance offers can be a good thing for some people, but for the vast majority of the population they are simply a marketing tactic dealerships and car manufacturers use to get people onto their car lots. If you do think you can benefit from a 0% offer, do your own homework, and keep in mind the aforementioned points that were laid out during this article. If you still feel uncomfortable, you should consult a qualified professional that specializes in financial matters such as an accountant or attorney.