What do car manufacturers, white goods sellers, and carpet warehouses have in common? They all love to show off their 0% interest deals.
Car manufacturers are offering hundreds of great offers with the intention of enticing in new customers – many of which feature these 0% finance deals. Are they all they’re cracked up to be?
What is 0% car finance?
A 0% APR car finance deal is straightforward enough. You spread the cash price of the car over a set of monthly payments, and you don’t get charged any more money for doing so. In short, you take out a loan but don’t get charged any interest rates. Generally, it’s available on Personal Contract Purchase (PCP) deals and Hire Purchase (HP) deals. It’s simple enough to understand. But it pays to read the small print.
0% car finance: the small print
Do the research before taking out any form of financial agreement. A website like Parkers.co.uk is perfect if you’re looking for advice. Check and double check the length of the agreement, the mileage limits, how much it is per month, and how much the balloon payment (optional final payment) is at the end of the agreement if you choose a PCP deal. An important reminder: you’ll need to make those payments every month – so make sure you can afford to pay it each time.
Check to see if the 0% APR is fixed for the length of the agreement. Generally, with manufacturer backed finance it will be. But it’s worth checking. Look at the T&Cs. See how much the charges are for going over the agreed mileage limit, what to do if you miss a payment, and what to do if you damage the car.
0% APR car finance pros
- Not charged any extra for spreading the cost of a car over a set period of time
- Big savings to be made. Typical car deals can add thousands of pounds in interest charges over the course of an agreement. With 0% APR you negate this
0% APR car finance cons
- A hefty deposit is usually needed to secure these deals. Some deals offer a buy-now-pay-later option, where you essentially pay 50% up front and then nothing for a year or more
- Terms are generally shorter than traditional PCP or HP contracts. This means higher monthly payments, but you own the car sooner too
- You have to have a good credit score and a good credit history to be applicable for 0% APR car finance
- Other discounts offered by dealers and car makers can rarely be used in conjunction with 0% APR car finance deals
0% APR car finance deals: Full list
Looking to buy a car with a 0% APR deal? These are the companies which currently have offers:
Ford’s finance deals are top notch. It’s currently only offering seven cars with 0% APR – earlier on in 2020 the company offered 10 cars with no APR attached.
Earlier in 2020 Hyundai only offered 0% on its Tucson, but now, there’s far more metal on offer. The Ioniq is available in all of its forms, plus, the rapid i30N and i30N Fastback.
Kia is currently running two different types of 0% APR deals. The newest is called ‘Zero In On Hybrid’ and as you can expect, it’s a 0% APR deal on its hybrid range.
Mazda’s entire range is now available with 0% APR, with either 36-month, 42-month, or 48-month long contracts depending on the car.
No longer a British sportscar maker, MG is now knocking out Chinese-built hatchbacks and SUVs with whopping seven-year warranties. The company is currently only offering 0% APR deals on its electrified cars, including the new MG 5 EV – Britain’s first electric estate car.
Nissan is currently running finance schemes on all of its models, but there are only three cars available that let you skip interest payments. A Micra will cost you around £200 per month.
SsangYong‘s 0% APR deals work out well if you’re looking at keeping a car for a long time, because all new SsangYongs come with a whopping seven-year warranty.
Subaru’s ’50/50′ deal requires a 50% deposit, then buyers can pay nothing for one or two years, then pay the final 50% balance. Helpfully, Subaru offers this deal on its entire range.
Suzuki, is offering a combined no deposit 0% APR deal on every mild hybrid it sells. The deals are available on 25, 37, and 49-month long contracts.
Most of the range is covered – good if you want to dip your toe into the pool of hybrid ownership, or fancy a GR Yaris hot-hatch or GR Supra sports car.
Vauxhall is offering 0% APR and £0 deposit deals on four-year PCP contracts with nearly all of its news cars. The British car company is also offering a payment holiday.
Volvo is really on a roll at the moment, with well rounded, good looking, and of course, safe cars. Its finance deals are top notch too – with 0% APR being offered on all its models bar the XC40 and S90.
What’s the takeaway?
If you have a good credit rating, are in a safe job and have a bit of money going spare, being a car on 0% finance is a financially astute thing to do as long as you can easily meet the payments. There are potential savings of thousands on interest charges, too, as even in this time of a low base rate, they can mount up over the period of the finance agreement.