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3 min read published September 27, 2022

Written by Kellye Guinan Written by Personal and business finance Contributor Kellye Guinan is an editor and writer on a freelance basis with more than five years of experience in personal financial planning. She also is an employee full-time at her local library, helping the community to access information on financial literacy, in addition to other subjects. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since late 2021. They are committed to helping readers to take control of their finances through providing clear, well-researched facts that break down complicated topics into bite-sized pieces. The Bankrate guarantee

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You have money questions. Bankrate can help. Our experts have helped you understand your money for over four years. We are constantly striving to provide our readers with the professional advice and tools needed to make it through life’s financial journey. Bankrate follows a strict standard of conduct, so you can rest assured that our content is truthful and accurate. Our award-winning editors and reporters produce honest and reliable content that will help you make the best financial decisions. The content created by our editorial staff is factual, objective and is not influenced through our sponsors. We’re open about the ways we’re able to bring quality information, competitive rates and useful tools for you , by describing how we earn money. is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for the placement of sponsored products and services or through you clicking certain hyperlinks on our site. So, this compensation can affect the way, location and when products appear within listing categories, except where prohibited by law. We also offer mortgage, home equity and other products for home loans. Other factors, like our own proprietary website rules and whether or not a product is available in your region or within your personal credit score may also influence the way and place products are listed on this website. Although we try to offer an array of offers, Bankrate does not include specific information on every financial or credit item or product. Many dealerships and manufacturers advertise no-interest car loans and, therefore, they are legit. It isn’t easy to qualify for a 0 per cent annual percentage rate (APR). You’ll require a high credit score. Also, you’ll need to pay for other charges therefore don’t think that zero-interest financing to come at no cost. How 0% financing works and why it’s a good idea If you take out an auto loan with an APR of zero percent, you’ll not have to pay interest over the entire loan period. It might seem like a good deal to be true, but 0 percent financing isn’t a rare thing. It’s offered through captive finance companies, which the manufacturer owns. The manufacturer utilizes these to draw in buyers, but only a few people can qualify. To make up for the interest cost the type of financing is reserved for new models. Buyers must still pay for documentation, title and licensing fees. Dealerships can also pressure on you to pay, or offer . These aren’t mandatory therefore be assertive when you decide not to. And don’t be afraid to bargain over the cost. Zero percent financing is just one aspect of the process for buying a car. How do you qualify for 0% financing ? Each lender has their own eligibility criteria. But, following these guidelines could increase your odds of approval as the most important prerequisite. The lenders want to make sure they have perfect history of making payments and managing your debt prior to offering you no-interest financing. Credit scores of 781 and higher is the best offer on financing, however you are still eligible for a if your score falls between 661 and 780. A steady source of income is also essential. Because your loan period could be only 48 months, resulting in high monthly payments, a lender will want to know you are able to afford the car payment. You might require a higher down amount. Even if you don’t have to make a down payment to qualify for loans, many lenders require a substantial down payment to qualify for a zero percent rate auto loan. Lenders also want to see a low . A low DTI confirms your income is sufficient to cover this new debt, in addition to any other payments you might be making. If you are eligible for no-interest financing at 0% is a great option for those who are planning to buy a new or (CPO) vehicle. The majority of manufacturers do not offer it on base models, and you’ll end up paying for extra features. If you’re eligible for financing, you’ll need to separate from the financing and come to the dealership with a financing lender. In this way you’ll be in a position to calculate the amount you’ll save on interest using the 0% financing. If you’re able to make the payment and know you’ll get a couple of thousand dollars on the vehicle you’d like buy, is the option for you. Otherwise, consider it carefully alongside other financing options. There are some disadvantages to a no-interest auto loan A no-interest auto loan isn’t always the best method to save money. Manufacturers and dealerships want to make up for the loss of money. Expect 0 percent financing to only be offered on certain models with added features — and for shorter loan timeframes. Manufacturers will offer only limited loan terms that include no-interest car loans. The standard period is between 24 and 48 months. Loans of 60 or 72 months are uncommon. Since your loan term is shorter, your monthly car payment will be greater . Ensure that you can manage the monthly payments. Rebates or bonus cash are not always accessible. Even though you’ll pay nothing in interest, you could not be able to get a . If your total interest is lower than the bonus or rebate cash, a no-interest loan will not save you cash. The majority of no-interest financing is for cars that are newer than the base model . Some companies may also provide it on . The bottom line No-interest financing can be a solid option to save money on a new vehicle. If you’ve already made plans to buy a higher-priced model, you can get rid of just a few thousand dollars in interest. If you’re okay with a higher monthly payment on the shorter loan term, you should be protected from paying more for your car than what it’s worth. But, only a handful of people qualify for an auto loan without charges. If you are it, you won’t save more than you receive through bonus cash or a new car rebate. It’s best to obtain financing before you start shopping and between what you’ll spend on interest versus the savings you’ll get with other options. Related articles: SHARE:

Written by Business and personal financial contributor Kellye Guinan is a freelance editor and writer who has more than five years ‘ experience within personal finance. She also is employed full-time at the local library where she helps people in her community get information on financial literacy, among other subjects. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate from late 2021. They are committed to helping readers feel confident to take control of their finances through providing precise, well-researched and detailed information that breaks down complicated topics into manageable bites.

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