Sometimes you see advertisements from automakers saying they can get you a brand new vehicle for over 80 months with zero percent financing. It may sound like a lot, but who really qualifies for 0% auto financing? It turns out that there aren’t many borrowers.
0% offers and bad credit
When you borrow money from a lender, you usually can’t do it for free. They charge you to borrow that money to buy the car, in most cases, in the form of interest. The amount you are charged is expressed as a percentage, and those with the best credit rating are generally eligible for the lowest interest rates.
In some cases, a borrower with an excellent credit rating may be eligible for zero percent funding, which means that they will not accumulate interest charges during the loan. However, borrowers with scores below around 660 (the typical bad credit range) are not normally eligible for these types of offers.
It is not plausible that a borrower with bad credit will count on the approval of a 0% finance contract. When you look at some of the details of these zero percent auto finance deals, they normally indicate that they are only for “well qualified” borrowers. Even borrowers in the 700 credit score range may find it difficult to meet the requirements of these agreements.
Additionally, most 0% finance deals are for new cars, and bad credit borrowers may have trouble qualifying for a new vehicle loan simply because of the high sticker prices. Zero percent finance agreements can also come with conditions that can make a borrower think twice.
Do these offers really have zero interest?
Yes, these car deals can really come with zero percent financing during the term of the loan. But, read all the fine print.
If you are responsible for your loans and have good credit then a 0% auto finance deal can be a great way to get into a new vehicle and save money on interest charges. .
However, these offers usually come with terms that could bite you in the end. They can declare that you pay no interest for 84 months if you stay up to date on the loan. Some offers may even come with a condition that late or missing payments mean you’re breaking the loan agreement, which could cause you to owe late interest on previous months – and pay interest on all of them. future car payments.
If you are not very diligent with your payments, you will probably be charged interest anyway, even if you were initially entitled to 0% interest.
What Can I Get With Bad Credit?
As a general rule, getting approval for a zero percent interest rate, or even an interest rate of less than 5%, with bad credit is implausible. These low interest rates are generally reserved for borrowers with the best credit.
However, that doesn’t mean you can’t get approved for auto financing.
There are auto loans for borrowers with less than perfect credit who have the ability to repair their credit. Subprime auto lenders work specifically with borrowers in unique credit situations, and they are registered with special finance brokers.
These lenders also report their auto loans to major credit bureaus, so your on-time payments can help improve your credit score for future credit opportunities. With a little hard work and patience, you can increase your credit and possibly benefit from lower interest rates or even those 0% finance deals in the future.
Finding a Special Finance Dealer 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 Express Credit. To be matched with a special financial dealer, complete our car loan application form – it’s completely free, no obligation, and we’ll immediately get to work to find a dealer for you in your area.