Sometimes, you see advertisements from automakers stating they can get you a brand-new vehicle for 80-plus months with zero percent financing. This may seem like a great deal, but who actually qualifies for 0% auto financing? Not that many borrowers, as it turns out.
0% Deals and Bad Credit
When you borrow money from a lender, you don’t typically get to do it for free. They charge you to borrow that money to buy the car, in most cases, in the form of interest. How much you’re charged is expressed in a percentage, and those with the best credit score typically qualify for the lowest interest rates.
In some cases, a borrower with a great credit score may qualify for zero percent financing, which means they won’t accrue interest charges during the loan. However, borrowers with scores below around 660 (the typical bad credit range) don’t normally qualify for these types of deals.
It isn’t plausible for a bad credit borrower to count on getting approved for a 0% financing vehicle deal. When you look at some of the fine print of these zero percent auto financing deals, they normally state they’re reserved for “well-qualified” borrowers. Even borrowers in the 700 credit score range can struggle to meet the requirements for these deals.
Additionally, most 0% financing deals are for brand-new cars, and bad credit borrowers can have issues qualifying for a loan on a new vehicle simply due to the high sticker prices. Zero percent financing deals can also come with conditions that can make a borrower think twice about going through with it.
Do These Deals Really Have Zero Percent Interest?
Yes, these car deals can really come with zero percent financing during the terms of the loan. But, read all of the fine print.
If you’re responsible with your loans and you have great credit, then a 0% auto financing deal can be a great way to get into a new vehicle and save cash on interest charges.
However, these deals usually come with conditions that could come to bite you in the end. They may state you don’t pay interest for 84 months if you stay current on the loan. Some deals may even come with a condition that states late or missing payments means you're breaking the loan contract, which could lead to you owing back-interest on the previous months – and being charged interest on all future car payments.
If you’re not super diligent with your payments, you’re likely to be charged interest, anyway, even if you initially qualified for 0% interest.
What Can I Get With Bad Credit?
Typically, getting approved for a zero percent interest rate, or even an interest rate below 5%, with bad credit isn't plausible. These low interest rates are typically reserved for borrowers with the best credit.
That doesn’t mean you can’t get approved for auto financing, though.
There are car loans for borrowers with less than perfect credit that have the opportunity for credit repair. Subprime auto lenders work specifically with borrowers in unique credit situations, and they’re signed up with special finance dealers.
These lenders also report their car loans to the major credit bureaus, so your on-time payments can help improve your credit score for later credit opportunities. With some hard work and patience, you can raise your credit and possibly qualify for lower interest rates or even those 0% financing deals in the future.
Finding a special finance dealership is the tricky part of getting a subprime auto loan, but we’ve created an easier way to find a dealer with the resources you need here at Auto Credit Express. To get matched to a special finance dealership, fill out our car loan request form – it’s completely free, carries no obligation, and we’ll get to work right away to find a dealer for you in your area.