0% Car Finance

What is 0% Finance for Cars?

0% car finance agreements

A 0% car finance agreement is a way of paying for a car without having to pay any interest.

It means that although you’ll borrow the money to pay for a new car, and spread those payments out over an agreed period of time, you’ll only pay back the amount you borrowed. You won’t pay any interest on the loan or 0% finance deal you agreed to.

0% finance car deals – also known as 0% APR deals or plans – can be an attractive option for potential customers and buyers. These types of car financing deals aren’t always widely available though, and not everyone will qualify to apply for them.

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0% Car Finance

How does 0% Car Finance work?

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How 0% finance for cars works is simple.

It’s a finance plan that could be applied to car finance deals such as Personal Contract Purchase (PCP) or Hire Purchase (HP), which allow you to spread payments for a new car over 24 months or longer. The length of the agreement can vary.

With 0% car finance, you only pay back what you’ve borrowed. So, if you borrow £20,000 on a finance plan and pay it off across five years, you’ll pay back that £20,000 divided over 60 months.

No interest charges will be applied, so you won’t pay anything extra. That will save you money over the course of the agreement.

This is understandably a popular option if you’re looking to buy a new car, as most other finance plans include interest, where you pay back what you’ve borrowed plus the interest. However, there are other details to consider.

Most 0% finance on cars deals require a deposit - usually a minimum of 10% of the vehicle's value, but it sometimes can be as much as 50% - so you need to have access to that kind of money in order to secure any such deal.

Some 0% finance offers might be available on shorter agreements than other types of car finance, so you’re paying higher monthly amounts compared to other options.

Not everyone is eligible for 0% car finance. Terms and requirements vary, but if you have a bad credit score you may be declined a 0% APR plan. 

0% finance offers are relatively rare and often used for short-term promotions. This means you may find you have a reduced choice of makes and models if that’s the only type of car finance you’re prepared to accept. Even when such offers are available, they may only be for a limited time, so you’ll often need to act fast to secure one.

0% Finance

What happens at the end of the 0% Finance Car Deal?

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What happens at the end of a 0% finance car deal depends on what type of car finance plan it’s on.

For example, if it’s a PCP deal, at the end of the agreement you have the flexibility of choosing whether to buy the car outright, return it to the finance company and walk away, or use it as part exchange for another vehicle.

You also have the option of re-financing the optional final payment. With HP, you own the car at the end of the deal.

Other car finance types

At Dick Lovett, we strive to provide the best possible car finance deals for our valued customers. 0% finance deals are usually manufacturer led time limited campaigns therefore, we recommend contacting our sales team during your new or used vehicle purchase to explore the latest finance options and offers available. Click below to learn more about other finance types.