Zero-Percent Financing: Yes or No?

Zero percent financing means that you don't pay any interest on the car loan--but you may be paying a premium when you don't need to. Is it really a good deal?


Choosing at the dealership

Most car-buyers don't qualify for zero-percent financing. Even if you do qualify, there are a few things you need to be wary of.

Some dealers offer a choice between discounted (or zero-percent) financing or a rebate - but not both. Consumers may erroneously assume that the zero-percent loan will deliver the most savings.

Sometimes it's better to take the cash rebate and use your own pre-approved car loan. Zero-percent financing is typically only offered to those with the best credit, on limited vehicles, for very short terms. Sometimes the price for the vehicle gets inflated to account for the loss of interest.

Do your homework. Discounted financing may not be the best option.