Many of us have encountered car advertisements that offer “0% financing.” They’re some of the most popular promotions in the auto industry. However, everyone has reason to doubt these types of deals because they just sound too good to be true. After all, they basically mean lending institutions will lend you some money without you having to pay for interest rates. So, what is the truth behind these financing plans?
This article will discuss what there is to know about 0% financing car deals and when they are worth getting. However, before that, let’s discuss how auto loans work.
An Overview of How Auto Loans Work
Auto financing means you’ll take out a loan from a lending institution, such as a bank, the dealership’s in-house financing services, or a third-party lender. You will get money to pay for your desired vehicle, and you have to pay the lenders back in smaller installments over a set period of time.
Aside from the money you owe, you’ll also have to pay lenders an interest rate for their services. Interest rates can vary vastly for different lending institutions, and they often depend on your credit health. They can sometimes be too costly, which puts many people off.
Fortunately, 0% financing car deals exist and allow people to borrow money to finance their cars without interest. This type of loan is a great way to get your dream vehicle without the costly annual percentage rate (APR). It’s basically paying the same amount as an all-cash buyer. However, many people wonder—how is such a deal possible, and what’s in it for lenders?
What You Should Know about Zero Percent APR Car Loans
Zero percent financing is typically not offered by the banks, but they’re popular among dealerships’ related financial institutions. The dealers and manufacturers can benefit from these loans by attracting borrowers to buy slower-selling vehicles and clear out their inventory.
It’s best to know that these loans are installment loans which you’ll have to pay over a set amount of time. This deadline is rigid, and failure to make payments will incur hefty penalties.
Getting 0% Car Financing
Zero-interest car financing deals are not too difficult to find, as they’re some of the most popular deals in the market. However, being eligible for these loans is a whole other story. It can be difficult to get approved because lending institutions will have to ensure that borrowers can pay for the amount they’ll lend.
The fine print for these types of loans is that lenders often have strict criteria for the borrowers they’ll approve. They often reserve the auto financing for customers who have high credit scores, as this typically signals that the borrower is financially responsible and can make full, on-time payments.
Some dealerships may look past the credit scores and offer zero-interest auto financing even for those who do not have good credit scores. However, even if you don’t get approved, there are many other deals to consider.
Get Guaranteed and Affordable Car Financing in Canada
Zero-percent auto financing deals are excellent for getting your dream car without paying hefty interest rates. They benefit both the dealers and buyers, but it’s notoriously difficult to get approved for them because of the stringent criteria that lenders often have. Still, getting these loans are great if you’re financially capable of making regular payments.
If you’re looking for affordable car financing in Canada, Get Approved Canada can help. We’ll assist you in getting the vehicles you need, no matter your credit history. We offer low-interest car loans throughout Canada, so fill out your application today!