How to Get 0 Percent Financing on a New Car
Many car manufacturers support their dealerships' efforts to move new car inventory by marketing 0 percent financing on new cars. Lenders generally offer the best credit terms and interest rates to borrowers with the highest credit ratings--usually somewhere in the range of 680 and 720.
- Difficulty:
- Moderate
Instructions
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Enhance Your Eligibility by Strengthening Your Credit Rating
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1
Ask point-blank, if necessary, to find out the point at which a lower credit rating will dictate that you get less favorable credit terms and interest rates.
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2
Maximize your chances to qualify for a car dealership's best financing deal by obtaining a copy of your credit report in advance and ensuring that your credit score is at least in the 680 to 720 range.
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3
Improve your credit score by cleaning up any mistakes and troubleshooting any problems on your credit report.
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4
Consider returning to a manufacturer, specific dealer or lender with whom you have purchased and financed previous cars, as this history may add points to the calculation of your credit score.
Get 0 percent Financing When It Is the Best Deal
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1
Do the math yourself to compare the savings available if a dealership offers you a choice between a cash rebate and a no-interest or below-market interest loan. By applying the entire lump sum cash rebate to your down payment, you may save more than you would with no-interest financing.
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2
Make sure that the 0 percent financing deal that you negotiate on a new car covers the entire life of the loan, not just the first year.
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3
Get it in writing. You may negotiate the basics of your auto loan with a salesman, but the deal is not set in stone until you have a final financing contract from the dealer's finance office. Many car buyers find it beneficial to speak to the dealer's finance person at the beginning rather than the end of the process.
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4
Read and comply with the small print on any car financing deal. Be aware of "catches" such as the possibility that a single late payment could trigger a higher, punitive interest rate.
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1
Tips & Warnings
Make sure that you understand the implications of the dealer's specific 0 percent financing offer with regard to details such as the length of the loan. If you are required to pay off a no-interest loan in 3 years, the payments may be significantly higher than they would be, with market-rate interest included, on a loan term of 5 or 6 years.
