If you’re looking for cheap car finance, you can’t do much better than 0% APR! This is a very appealing option for most people, though of course not everyone will be eligible for a no interest loan. There are also a few things to consider before accepting a 0% interest deal, such as whether this rate is fixed for the entirety of the agreement, and whether the monthly instalments will be affordable for you. We’ve explored cheap car finance rates in more detail below:
What is 0% Interest Car Finance?
As the name suggests, a 0% interest car finance agreement is a loan where you don’t pay any interest. Such offers are becoming a lot more common these days, and you can get 0% APR on anything from sofas to washing machines.
Generally, you’d get a 0% interest vehicle loan directly from the manufacturer, though some individual dealerships also offer cheap car finance deals too. You should be able to get 0% APR on both Personal Contract Purchase (PCP) and Hire Purchase (HP) agreements, though primarily on new cars.
Can I Get 0% Car Finance?
You’re more likely to get accepted for a 0% APR car loan if you have a great credit history. This will mean that you’ve demonstrated that you’re able to manage your money well, making repayments on time and not taking out too much credit at once. If you’re unsure what your credit score is like, you can check this for free using services like Credit Karma and Experian. Their websites also offer lots of helpful information on improving your credit rating.
Another factor that may impact your ability to get 0% interest vehicle finance is your age. Young drivers might find it more difficult to get this sort of cheap car finance, especially if they don’t have much of a credit footprint. Someone who hasn’t taken out a lot of credit previously won’t be able to demonstrate that they have a history of on time payments, so finance providers are less confident in lending to them.
Advantages of 0% APR Car Finance
The obvious benefit of 0% interest car finance is the amount of money you could save. Most vehicle finance agreements come with hundreds, if not thousands, of pounds worth of interest, spread over the duration of the loan. But with a 0% APR, you won’t be paying any of this interest.
Essentially, with a 0% interest rate car loan, it's as if you bought the car outright at the start of the agreement. You won’t be charged any extra money for spreading the cost of repayment. So if you’re looking for cheap car finance options, this is about as good as it gets!
Limitations of 0% APR Car Finance
Unfortunately not everyone is eligible for 0% interest vehicle finance. Not only are you likely to need a large deposit to secure such fantastic rates, you’ll also need a high credit rating. Generally, this means your credit score would need to be in the good to excellent range.
Another disadvantage of 0% APR car loans is that if a dealer is offering any other deals or discounts, these probably won't be applicable. Most such offers won’t be valid in conjunction with a 0% interest rate.
One more thing to keep in mind with no interest car finance is the duration of the loan. In most cases, the terms of the loan will be shorter than a traditional agreement. While this means you’ll own the car sooner, it will also result in higher monthly payments, even if you are paying back less overall.
0% Used Car Finance
If you are looking for 0% interest vehicle finance, it’s important to note that most of the offers will be for new cars. You can sometimes get 0% APR deals for second-hand vehicles, but you may need to be careful with such offers. Some dealers may simply work out how much interest would be applied over the course of the loan, and then add this to the total sale price of the car.
As a general rule, you should also look carefully at any car finance agreement. So check the terms and conditions before signing, and make sure you know things like the agreed mileage limit, what happens if you damage the car, and what to do if you miss a repayment.
How to Get Cheap Car Finance
You may not always be offered the best rate when it comes to vehicle finance, but there are ways to overcome this! For instance, you can get cheap car finance by trying to improve your credit score. If you have a high credit rating, you’ll generally be given lower interest rates on finance. So how do you go about doing this? One easy way of boosting your credit score is to sign up with Experian. They’ll use additional information when calculating your score, like your subscriptions, to show that you’re able to make regular payments.
Another way to improve your chances of getting a great car loan is to use a broker service such as Wheelie Good Finance. A broker can help you compare lenders and find the most suitable agreement for your situation. They'll also ensure that you meet all the eligibility criteria with the lender you apply with. All you need to do is enter your details, and the broker will do the rest! To get started, apply with us for a free, no obligation quote.