What You Need to Know About Zero Percent Financing on a Car

In order to fully understand what zero percent financing means, you must know the definition, the pros, and the cons. This article will tell you about what 0% financing is and the benefits and drawbacks that are associated with it. This will give you an idea if this is something you want to take advantage of when going through the car buying process.

So, what is 0% financing?

Car dealers want to give buyers an incentive to buy a vehicle from their dealership. This is where 0% financing comes into play. When a dealership offers 0% financing, all they are saying is that on your purchase, you will have a 0% interest fee. This means you don't have to pay any interest rates on the vehicle you are looking to buy. Now before you hop on board with that enticing idea, you must realize that there are advantages and disadvantages to this deal.

What are the advantages?

The biggest and most obvious advantage to a zero percent interest rate is the fact that you won't have any additional cost to the car besides the amount that you owe. This, in turn, can save you up to thousands of dollars over the lease length. Another advantage is that you don't have to worry about the lease length for as long. Usually when a dealership offers zero percent interest rate deals, it is done so with shorter loan repayment terms. This means you will pay off your car sooner rather than later.

What are the disadvantages?

Unfortunately, there are some drawbacks about a zero percent interest rate. If you don't have a good credit score, then a rate with no interest will most likely not be an option for you. Dealerships and finance companies alike want to protect their default risk (the chance that the borrower will not repay the loan) by only giving this offer to qualified buyers. So, if you are approved, you now have a short lease term which means higher monthly payments. Also keep in mind that the fact that the car dealership is losing potential profit, they are more likely to bump the price of the car or give you less on a trade in value, you must be aware of these to make sure you're actually getting a good price for the vehicle you are looking to get.


Zero percent interest rates are not for everybody. However, if you qualify for one, can afford the monthly payments, and ensure you are not getting ripped off then zero percent interest rate deals will definitely be something you should consider the next time you buy a vehicle! Make sure you look at all of your financing options before jumping into a repayment plan that may break the bank. If you are unsure what to do, do not hesitate to contact your financial institution for advice about financing for your vehicle. You can also utilize other only resources to make sure you are getting “bang for your buck”!