A 0% APR car loan is an auto loan that has no interest rate. This means that 100% of your monthly car loan payment will go towards the loan’s principal balance. There will be no interest charges at all.
Dealerships usually offer 0% financing only on new cars, and you typically have to have a very strong credit history to qualify. Furthermore, these promotions are generally only available from what’s known as captive financing companies. Captive financing companies are the finance arms of vehicle manufacturers, for example, Ford Motor Credit co. or Toyota Motor Credit Corp. Manufacturers use these deals to incentivize customers to purchase brand-new vehicles, which sell at significantly higher prices than used vehicles.
If you want to get a 0% APR on your next car loan, you need to understand what it takes to qualify for a zero-interest car loan and where you can find these types of deals. Fortunately for you, we can show you how to find the answers to these questions. Here are three things you can do to help you qualify for 0% APR on your next car loan.
Get Your Credit In Order
Before you head to the car dealership, you need to check your credit report and score. Your credit score will determine your eligibility for 0% APR financing. Your credit report is used to calculate your score, so you should check it carefully to make sure there are no errors. If something on your credit report looks incorrect, you need to dispute the mistake before submitting a car loan application
Lenders don’t usually share what credit scores are necessary to qualify for a 0% APR auto loan. Still, credit scores of 700 and higher are usually considered quite good and are your best chance at getting approved.
If your credit is not 700 or higher, you should work to improve your score before applying for 0% APR financing. You can improve your credit by:
Look at Manufacturers for 0% APR Auto Loan Offers
If you have good credit, the next thing to do is start looking for the 0% APR auto loans you want to go after. These zero-interest vehicle loans are usually only offered by auto manufacturers, not banks or credit unions. Therefore you should start your research by looking for auto manufacturers that are offering 0% APR loans.
You can usually find these offers by going directly to the manufacturer’s website. In general, manufacturers will offer no-interest loans on specific models and under particular circumstances.
Negotiate your Car Price and Apply for the Loan
Once you’ve found a manufacturer offering a 0% APR car loan deal, it’s time to negotiate the price of the car you want to purchase. It’s important that you wait to tell the dealer you’re looking for 0% APR financing until after you’ve negotiated the price of the car. This is because you’re more likely to get the best price possible if you negotiate the car’s price first. Once you’ve settled on a car price, you can start the process of applying for the auto loan.
If you want to get 0% APR financing on your next auto loan, there are three things you need to do. The first thing you need to do is have an exceptional credit score or start working towards improving your score. The next thing you need to do is research manufacturers to find the ones offering the 0% APR deal you desire. Lastly, you’ll want to negotiate the price of the car you want, then let the dealer know you wish to apply for 0% APR financing.