Zero apr cars - 3 Steps Every Car Buyer Needs to Take to Save Maximum Money

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Best 0% Financing Deals December

 

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Signup for The Weekly Newsletter. After being ripped off on his first car purchase, he devoted several years to figuring out the best ways to avoid scams and negotiate the best car deals. He has written hundreds of articles on the subject of car buying and taught thousands of car shoppers how to get the best deals. I welcome your car buying questions. The interest you pay helps the lender earn a profit. Financing a car interest-free almost sounds too good to be true. But these financing deals are a tool that auto manufacturers can use to sell more vehicles.

Lenders that offer 0 percent financing are known as captive finance companies and are linked to the auto manufacturers themselves. So, if Ford wants to sell more Fs due to overstock issues, it might offer zero APR loans to select borrowers through its own financing arm. For example, a dealership may push hard to sell you add-on products , like extended warranties or gap insurance , with your vehicle.

You also might have to forgo benefits like rebates that would normally bring down your purchase price. Zero percent financing deals are generally reserved for borrowers with excellent credit — typically classified as a credit score of and above. Each lender also has its own definition of excellent credit, and qualification requirements could vary from vehicle to vehicle.

Because zero APR qualification standards vary so widely, your best bet is to call the auto dealership in advance. Ask what criteria you need to meet to qualify for interest-free financing on a specific vehicle. Aside from your credit score, an auto lender may consider additional factors when it reviews your application, such as:. Regardless of the condition of your credit — good, bad, fair or excellent — you should take the time to seek preapproval from outside financing sources as well.

Interest-free financing might be a great deal for some borrowers. Still, there are a few potential pitfalls you should look out for when considering this type of financing. Automakers want you to purchase your next vehicle from their company, not a competitor. This is a key reason 0 percent financing offers exist in the first place. In the same interest of attracting new customers, auto manufacturers often offer bonus cash rebates to buyers.

Sadly, an auto manufacturer might not let you take advantage of both 0 percent financing and bonus cash. Bankrate tip: Using an auto finance calculator can help you compare apples to oranges when it comes to 0 percent financing versus bonus cash incentives. Sometimes taking the cash rebate an auto dealer offers along with a higher loan APR will make the most sense as far as overall savings. In other instances, 0 percent financing might be the clear winner.

Depending on your situation, refinancing your new auto loan in a few months might be an effective strategy. There are several financing specials on sport utility vehicles. Our top pick this month is the Honda Pilot with a deal of 1. It's easier to splurge on a stylish, high-end vehicle when you don't have to pay interest. Our top pick this month is the Infiniti QX80 with a deal of 1.

See all our picks for the best 0 APR luxury vehicle deals for December ». When you get a car loan from a dealership or lender, they make their money by charging you interest and loan fees. These fees are factored into your monthly payment and spread out across the life of the loan. The annual percentage rate APR is the percent of all your payments over a year that goes towards interest and fees. The higher the APR, the higher your monthly payment.

If we applied the average APR of 4. If you read the fine print, you'll realize that most zero APR offers will require you to be a well-qualified buyer with excellent credit and you cannot combine with other offers.

Dealerships can offer zero interest car loans because they make money on the sale in other ways, like a higher car price, or add-ons in the Finance Office with things like gap insurance or extended warranties. And sometimes the catch is that the low APR may only apply up to a certain amount requiring you to make a bigger down payment else pay a higher APR for anything above the limit. Learn more about choosing between low APR or cashback. Typically, this type of incentive is only offered on new cars.

Occasionally, a dealership will advertise a no-interest deal on a used vehicle, but these are very hard to find. A better approach to is focus on negotiating the sales price of the used car you want and then get competitive financing from a bank or credit union.

In most cases, low APR loans have strict requirements that can be difficult to meet.

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