Is 0% Car Financing A Good Deal?

Zero percent financing can make your loan costs lower when buying a new or used car. Learn the 10 best cars you can buy now in Canada with a zero percent financing deal. 

When buying a new or used car with financing, one important number to hone in on is your car loan annual percentage rate. Your loan APR reflects the cost of borrowing annualized over the course of a year. If you’re trying to save money on a car purchase, a zero percent financing offer could be tempting. While this kind of financing isn’t completely cost-free (you may still pay loan fees), it can mean paying less in interest.

Key Takeaways

• 0% financing isn’t always the best deal – It may come with shorter loan terms, limited vehicle choices, or higher monthly payments.
• Strict eligibility requirements – These offers are usually limited to buyers with excellent credit.
• You may lose out on other discounts – Cash rebates and dealer incentives often can’t be combined with 0% financing.
• Compare total costs – A low-interest loan with incentives might save you more than a 0% financing deal.

What Is 0% Car Financing?

0% car financing is a promotional offer where dealerships provide loans with no interest, meaning every dollar of your payment goes toward the vehicle’s cost. While this can seem like a great deal, these offers are typically reserved for buyers with excellent credit and may come with trade-offs like shorter loan terms or fewer vehicle options. Additionally, 0% financing often cannot be combined with cash rebates or other incentives, so it’s important to compare all available offers before deciding.

How 0% Car Financing Works

With 0% car financing, the dealership or manufacturer offers a loan with no interest, allowing you to pay only the vehicle’s purchase price over a set period. Unlike traditional loans, where a portion of each payment covers interest, every dollar goes toward the principal. 

Best 0% Car Financing Deals For March 2025

With interest rates on the rise, finding 0% financing deals can lead to huge savings when purchasing a new vehicle. Some manufacturers are still offering zero-interest financing, with loan terms extending up to 72 months on select models. If you’re in the market for a new car, here’s a breakdown of the best 0% APR offers available this month.

0% Financing For 72 Months

For those looking for longer loan terms without paying interest, the following brands are offering 0% financing for up to 72 months:

• Volkswagen
• Ford
• Dodge
• Jeep

Bonus: Some of these manufacturers also offer cash-back incentives in addition to 0% financing, making the deals even sweeter.

0% Financing For 60 Months

If you’re comfortable with a shorter loan term, these automakers are providing 0% APR for 60 months:

• Hyundai
• Nissan
• Ford
• Lincoln

Featured Models With 0% Financing

Several popular models qualify for 0% financing, including:

• 2024 Toyota Mirai Hydrogen
• 2024 Volkswagen ID.4 Electric
• Additional models from select manufacturers

Pros And Cons Of 0% Financing

While 0% financing can help you save on interest, it’s not always the best deal. Before committing, consider both the benefits and potential drawbacks to ensure they align with your financial situation:

Pros

• No interest charges – Every dollar of your payment goes toward the vehicle’s cost, saving you money over time.
• Lower overall cost – Without interest, the total amount paid for the car is typically less than with a traditional loan.
• Simpler financing – With a fixed payment and no interest, budgeting for your car loan is more straightforward.
• Access to newer models – These deals are often available on the latest vehicles, making it easier to finance a brand-new car.

Cons

• Strict eligibility requirements – Typically reserved for buyers with excellent credit.
• Limited vehicle selection – Only certain models may qualify for 0% financing.
• Shorter loan terms – Monthly payments can be higher due to reduced repayment periods.
• Loss of rebates and incentives – You may have to forgo cash discounts or other dealership offers.
• Not always the best deal – A low-interest loan with rebates might save you more in the long run.

Who Qualifies

0% financing is typically reserved for buyers with excellent credit scores, usually 700 or higher. Lenders view these borrowers as low-risk, making them eligible for special financing deals. In addition to strong credit, applicants may need to meet income requirements, have a low debt-to-income ratio, and demonstrate a solid repayment history.

Common Restrictions And Limitations

Zero-percent financing often comes with strict eligibility criteria, requiring a high credit score and strong financial history. These deals are usually limited to select models, excluding popular or in-demand vehicles. Loan terms may be shorter than standard financing, leading to higher monthly payments. Additionally, cash rebates and other incentives may not be available if you choose 0% financing. Some dealerships may also require larger down payments or perfect payment history to maintain the offer.

Is 0% Financing Always The Best Option?

Not always. While 0% financing eliminates interest costs, it may not be the most cost-effective choice. Some buyers may save more by choosing a low-interest loan with cash rebates or dealer incentives. Additionally, higher monthly payments from shorter loan terms can strain a budget. If you don’t qualify for 0% financing, exploring alternative financing options with competitive rates may be a better fit. Always compare total costs before deciding.

How To Know 0% Financing Isn’t Right For You

0% financing might not be the best choice if you don’t qualify due to credit score requirements or income limitations. If the deal excludes cash rebates or incentives, a low-interest loan with discounts may save you more overall. Additionally, if the loan term is too short, leading to higher monthly payments, it could strain your budget. If you need more flexibility or access to a wider selection of vehicles, exploring other financing options might be a better fit.

Getting Started With 0% Car Financing With Birchwood Credit

Buying a car with zero percent financing typically means you’ll need to have good to excellent credit to qualify. If you have a less than perfect credit score, Birchwood Credit Solutions can help. We offer vehicle financing for buyers from a range of credit backgrounds, including those who’ve been through bankruptcy or divorce. We also work with newcomers to Canada who are just beginning to establish credit.

Browse our extensive vehicle inventory for cars, trucks, SUVs and more. If you’re ready to learn what kind of financing terms you may qualify for, complete our quick and simple online application today.