How Can It Be Zero Percent?
Automakers' financing companies forgo the money they would have made on loans with interest in favor of selling more of a particular vehicle. This financing incentive can spark sales of a slow-selling vehicle or help clear out inventory to make room for cars from the new model year.
The availability of zero percent deals has followed a pretty rigid pattern, said Jeremy Acevedo, senior analyst for Edmunds. Zero percent offers typically peak in the summer months to stimulate sales for the outgoing model year and stay "relatively subdued" in the other months. It remains to be seen if this pattern will continue in an era of high interest rates.
And while such carmakers as Chrysler, Nissan and Toyota largely walked away from zero percent loans in late summer of 2018, shoppers could still find the offers on selected models from carmakers including Ford, Subaru and Kia.
Carmakers advertise the no-interest loans in commercials, at dealerships or on their websites. The Edmunds Incentives and Rebates page also highlights zero percent financing offers and other promotions for the month.
Sometimes a dealership will offer its own version of zero percent financing. In this case, the dealership opts to pay the interest on your loan, either to sweeten a deal or as an incentive for you to make a large down payment. It typically occurs when a buyer already qualifies for a loan with a low annual percentage rate (APR) and the amount being financed is a figure the dealer deems reasonable.