What Is the Downside of Buying a Car With Zero Percent Financing?


Quick Answer

Some of the downsides to zero percent financing are as follows: only available to a limited number of customers, shorter-term loans with higher monthly payments, not available for certain models, and other deals such as cash rebates or ticket price cannot be combined with it, according to Kelley Blue Book. Zero-percent financing is offered by the financial partners of the major American retailers.

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Full Answer

Although car manufacturers advertise zero percent financing as one of the major enticements to attract customers, only a select few buyers qualify for such loans, explains Kelley Blue Book. Although finance companies are looking to expand the pool of qualifiers, and a customer does not need a perfect credit record to qualify, the rating must still be very good. Most zero-percent financing loans also have shorter terms, making for higher monthly payments, which leads many customers to choose more conventional financing because their monthly payments are lower.

It is often more difficult to negotiate a lower price if a customer is applying for a zero-interest loan, but customers should consult with the individual dealerships, adds Kelley Blue Book. Other special deals also cannot be combined with the zero percent financing application. The offer commonly does not include option packages or premium deals. Even if a customer does not qualify for this type of loan, other low-interest loans are commonly available,

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