How to Finance a Car at 0% Interest

Auto Loans
How to Finance a Car at 0% Interest

Buying a car is a large purchase, so being able to get 0% interest financing can save you quite a bit of money. You may be able to finance your next car at 0% interest. Here’s what you need to do.

Set yourself up for the best rates possible

As with any loan, lenders offer the best interest rates — including 0% interest rates — to those with the best credit. If your credit score is good or excellent, then you’re more likely to get a favorable rate on your car loan. You can still get a car loan with fair credit, but will probably not get 0% interest. If you have bad credit, lenders are extremely unlikely to give you 0% interest — in fact, they’ll probably give you a very high rate! So, if you want to finance your car at 0% interest and have fair or bad credit, first work on improving your credit score. Something you may not know is that car loan lenders may choose to look at your auto-enhanced score, which highlights your past financial behavior related to car loans and vehicle repossessions. In general, if you have a good or excellent credit score, your auto-enhanced score should be similar.

The lender may also want to take a look at your income stability to make sure you have adequate income to pay off your loan. The combination of your credit score and income stability level will determine what interest rates you are offered.

See who usually offers 0% interest financing

There are many institutions from which you can get financing for your car — credit unions, banks, insurance companies, peer-to-peer lending services and major car companies. The latter are the ones that most often offer car loans with very low rates, with the aim of increasing their sales. Getting your financing through a major car company is probably your best bet to securing 0% interest.

Cut out the middleman

After you figure out which provider you want to ask for financing, you should deal with it directly. Many people don’t realize they can do this and instead the auto dealer acts as an intermediary between the buyer and the lender. Eliminate the middleman and get preapproved by your chosen lender, then head to the dealership to pick your car.

Funding a vehicle’s high price tag is no small matter. You’re smart to seek out the lowest interest rates possible to finance this purchase and save yourself money in the process. However, you need to take the right steps to put yourself in a position in which favorable rates — such as 0% interest — are available to you. Once you do that, the hard part is over and you can enjoy your new car.


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