3 expert tips to get a 0% car loan

We are entering the best time to buy a new car. With the first of the new year quickly approaching, dealers are eager to offload vehicles from the previous model year. One way shoppers can take advantage of this time is to shop for promotional 0 percent APR deals. 

While these deals can be challenging to find, drivers with strong credit can get a competitive deal with some forethought and flexibility. As a reporter covering auto loans for the past three years, I sat down with two experts to get the inside scoop on how drivers can find the best deal for their next vehicle purchase.

1. Be flexible with vehicle type

Promotional deals like 0 percent APR vary based on vehicle brand and type and are provided by the dealership itself. One surefire way to increase the odds of finding one of these offers is to be flexible with the vehicle you intend to buy. It’s fairly unlikely you’ll find dealers having trouble selling this year’s most popular deal — sellers are usually trying to get the less attractive, less popular vehicles sold. 

Go look for the deal and let the car follow that, advises Brian Moody, author at Kelley Blue Book. Being flexible on vehicle color, style and type can result in more available discounts and money saved. When asked if shopping for a less-flashy vehicle is the right move to save money, Moody’s response was a direct and resounding yes.

“That’s just good, solid advice, because if what you’re after is, hey, look at me, that costs something, right? If you want to be the first person to have a Bronco, a Mustang, a Volkswagen, whatever it is you’re going to pay that’s part of, hey, look at me. But if your bottom line is the bottom line, then you go looking for where these deals come from, no matter where they come from. And oftentimes they’ll be on sedans, or maybe on a 2023 versus the 2024 and that’s how you get the best deal.” — Brian Moody, Kelley Blue Book

The core of the message is simple: It’s very unlikely that you will find a 0 percent APR offer for a new vehicle outfitted with all the bells and whistles. If saving money is your top priority, then flexibility is key. 

The best way to decide if a vehicle is right for you comes down to what you deem as nonnegotiable. If you live in a cold climate, a vehicle with four-wheel drive should be top of mind. On the other hand, if you don’t have any kids and only drive to and from work, a smaller sedan may be suitable. 

2. Shop at the end of the promotional year

Another tip for finding a 0 percent car deal is to shop at the end of the promotional year. If you are considering buying a new vehicle over the next few months, waiting until the holiday season or after is in your best interest. Ivan Drury, director of insights at Edmunds, explains that the biggest factor in finding a competitive promotional deal is inventory. 

“You look at it from an automaker by automaker point of view, and model by model point of view, you’ll find that it’s always going to be the vehicles that have sat on the dealer’s lots too long or the ones in which the competition has gotten very stiff,” Drury explains.  

Drury goes on to explain that if a popular SUV, for example, has had the same design for the last four or five years and is being beaten out by a competitor in the same category that had a redesign, incentives such as lower rate or 0 percent rate financing are the biggest lever that dealers can pull. In many ways, incentives are the best way to get the second-best option sold. 

The key to securing those deals is to shop for those second-best deals. So while the idea of choosing the second on the podium might not feel like a successful purchase, it will be a win in the money you save. 

When heading to the dealership at the end of the year, do some research ahead of time to get a firm grasp of which automakers might be offering deals. Edmunds has a rundown of the best available car deals that can serve as a great starting point to find a good deal.  

3. Improve your credit

Knowledge is power when it comes to getting a competitive deal on your auto loan. It helps you accurately compare available rates that you are likely to qualify for, and you’ll be able to spot if an offer is fair based on your credit. Brian Moody reinforces this point. 

“I think that one of the important things is that you ought to know your credit score because your credit score is going to determine the type of deal that you get, including those 0% loans,” he explains. A 0 percent financing deal, he continues, is not available to everybody — borrowers must have strong credit in order to qualify. So the best way to get a “free money” financing deal is to get your credit score in tip-top shape ahead of purchase.  

That said, less-than-perfect credit doesn’t mean you will never qualify for one of these deals. It just means that you need to work to improve your score before the purchase. Borrowers can improve their credit scores by paying down debts, reducing their debt-to-income ratio and disputing any errors. All of this combined will put you in a better position to get a competitive deal.  

0% car loans over the years

Auto loan rates are loosely tied to macroeconomic factors, and to an extent 0 percent car loans have some commonality. One main difference is that 0 percent offers more closely ebb and flow with the vehicle supply chain. 

At the start of the COVID-19 pandemic, for example, dealerships wanted to unload the vehicles on their lots. The low rates dealers were offering, according to Drury, were unprecedented. Dealers at the time were offering 0 percent deals for terms up to 84 months — an offer hard to come by these days. 

“You look forward a few more years,” Drury says, “And we’re talking about like 2022, you start to see that with interest rates going up, the correlation with vehicle APRs, it’s right there.” While interest rates and promotional offers are not tied one to one, they are correlated and can start to take a toll on consumers. 

Now moving into the tail-end of 2024, finding a 0 percent APR car deal will be nowhere near as easy as it was in early 2020. But drivers with strong credit who are willing to be flexible can work to secure one. More than that, If you can’t find a 0 percent deal, you might be able to find a 5 percent or lower APR offer, which can help you cut down monthly costs and accrued interest throughout ownership. 

According to Edmunds, the share of dealers with 0 percent offers was 3.2 percent in August. This is up over the last six months but still below the highs in May 2020. Consider how the availability of 0 percent APR deals has shifted from 2019 to the spring of 2024.  

Bottom line

The cost of financing a vehicle is expensive, and while promotional offers near and below 5 percent are not easy to come by, there are ways to improve your chances. Once you compare auto loan rates and are ready to go to the dealership, remember a few key tips. Prepare to be flexible with vehicle type, focus on shopping at the end of the year and improve your credit before you apply.