Cars and Drivers

0% Financing Become a Great Deal for Car Buyers

Douglas A. McIntyre

Published: May 20, 2024 10:40 am

24/7 Insights

• One alternative to high interest rates is 0% APR financing car loans.
• However, these loans are often offered on unpopular autos.

A JPMorgan Chase customer who wants to buy a new car can get an interest rate of about 7%. Three years ago, that was closer to 3%. The 7% adds a large amount to monthly car payments. One option is 0% APR financing for as much as 72 months, which is available on several models.

Car buyers who take out high interest rate loans can find that they may spend $30,000 on interest for a $40,000 car over 72 months. And there is the problem of “negative equity.” At some point, the price of the car drops 50%, while the money owed declines less than that. People who trade in a vehicle at a low price and have a high loan balance often have to pay off the entire balance of that loan in cash before taking delivery of the new vehicle. Among other people with financial payments, cars are abandoned. Why pay for a vehicle that is worth less than the loan?

Some cars with 0% loans are unpopular and dealers want to get rid of them. Subaru has an electric vehicle (EV) called the Solterra, which has a base price of $44,995. Subaru offers 0% APR financing for 72 months, but car companies are struggling to sell EVs.

The Nissan Rogue, which sells well, has a 0% financing deal for 36 months. The Ford Edge has a deal of 0% APR for five years. Perhaps the manufacturers have excess inventory. It is hard to know. They are good deals for those who find them attractive.

For people shopping for a new car, it is good to look for 0% APR for 72 months, particularly if they are open to more than one model.

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