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The Truth About 0% Auto Financing

Zero percent financing is heavily advertised by the big auto makers to get people into their dealerships. But is 0% financing as great as it seems?

This page:

Briefly describes how 0% auto financing works

Explains how you could save more with the dealer's rebate

Lists some additional benefits of independent financing


Get the lowest auto loan rates:

Capital One Auto Finance offers the lowest auto loan rates in the country, for people with all types of credit ratings.

Apply with Capital One whether you are buying a new or used car, or even if you are buying from an individual. Whatever your choice, you will save thousands.

Auto loans
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If you have poor or no credit, click here to apply for special financing.


How 0% Auto Financing Works

Car manufacturers (GM, Ford, DaimlerChrysler, and to a much lesser extent, Japanese manufacturers) advertise their zero percent financing deals heavily, because it is a great hook that gets everyone in the door.

But is zero-percent financing right for you?

0% Auto Financing can be a dream come true for people with excellent credit. But for many car shoppers, zero-percent financing is simply not feasible.

Statistics from CNW Research (a consumer advocacy organization) show that only about one-third of buyers who apply for zero-percent financing actually qualify.* And among those, only around 10 percent actually close the deal, according to the National Automobile Dealers Association.**

Why do so few people benefit?
Because of drawbacks like these:

Shorter loan terms. Some dealers offer 60-month terms, but 36 months is more typical--which means higher monthly payments. (Although we genrally recommend that you keep the number of payments low to keep the total loan cost low)

• Fewer models to choose from. The customer may be limited to what's in stock, and therefore, not able to buy the vehicle they truly want.

No rebate. The customer may be asked to choose either zero-percent financing or a cash rebate.

Can you do better than zero-percent financing? Sure. By financing with a low rate from Capital One and taking a dealer's cash rebate (if available), you could really save big:

With a Capital One Blank Check® you gain a strong negotiating advantage. (Many people lured by zero-percent financing get so distracted by the offer that they forget to negotiate the price of the car.) With a Blank Check®, you don't to worry about financing and can concentrate on negotiating the lowest price.