Can you still get 0% interest on a car loan?
Reality: Few qualify You’ve seen auto dealers offering 0% interest on car loans, and maybe you’ve wondered how they can afford to make that offer. It’s simple: very few people actually qualify for the 0%. The 0% financing is typically reserved for buyers with the best credit. Zero percent financing is typically limited to “qualified buyers” or those with “tier one credit. This means you’ll likely need to have a credit score higher than 700 or 720 to be eligible for 0% financing.Here are the specifics of what most buyers need to get zero-interest financing: Credit score—While each dealership sets its preferred credit score, usually it’s in the superprime range, which is 740 or higher. Debt-to-income ratio—This should illustrate a history of on-time bill payments.Zero-interest loans might seem like a no-cost way to borrow money, but they come with hidden risks. These loans can encourage overspending and impulse purchases, and they often come with strict repayment terms and hefty penalties if you miss any payments.
Is 0% financing worth it?
The Bottom Line. While 0% financing can be appealing, it’s not always the best money-saver. By opting for it, you might miss out on substantial rebates, dealer incentives, and price negotiations that could lead to greater savings. It’s essential to look beyond the 0% and consider the total cost of the vehicle. If you have a low-interest loan or 0% financing, there is little to no benefit to an early payoff. The same is true if you’re close to the end of the loan. If you don’t have an emergency fund, use your extra cash to start one before you pay off your car loan.
Does 0% APR hurt credit?
If you use the 0 percent intro APR period to run up higher balances than usual, you might end up with a high credit utilization ratio that hurts your credit score. Getting Comfortable With Debt Some people open multiple credit cards to capitalize on short-term 0% APR deals. These cards can be great for getting out of debt sooner if you do a credit card balance transfer. However, these deals can trap people into the habit of borrowing money.