In this day and age of low interest rates for loans people wonder if they can find a loan for their automobile for 0% The answer is maybe, but it might not be the most practical or cost effective solution.

If a customer is offered zero percent interest on an auto loan, it is worth asking what hidden costs may be incurred. How is it worthwhile for a dealership to offer a loan at zero percent? The answer is complicated. It may be that the dealership uses zero percent financing as a marketing ploy to get customers in the door. But low and behold, once they apply for the auto loan, they fail to qualify because they don’t have blemish free credit. A credit score less than excellent due to perhaps a late credit card payment, or not having enough time to build up excellent credit, even with good credit, a consumer will probably not qualify for zero percent. The dealership can then offer a new offer and the shopper needs to decide how great the new deal sounds.A dealer needs to make money on their vehicle. They know what the low number they are willing to accept regardless of whether or not the customer knows that number. If a dealership is hurting for sales, they are more likely to make a winning sale, offering zero percent if that’s what’s going to bring their customer to the table.

A customer has more leverage at the end of the month or the end of the model year when dealerships are trying to move new inventory and are less likely to hold out for the big fish willing to pay 5% financing.

Sometimes a zero percent loan doesn’t make sense, particularly if you can talk down the cost of the vehicle. If a consumer can negotiate no down payment or perhaps a couple thousand dollars off of the price of the vehicle and a low interest rate, it may be in his/her best interest, no pun intended, to take that deal rather than hold out for the zero percent interest. It is not a matter of whether the customer will pay the money… it  is a matter of when, and sometimes a lower cost keeps more money in the bank for longer.

It is possible to find a 0% auto loan, but in terms of the pocketbook, it is not necessarily a winning deal.

Note: Generally, direct auto loan lenders offer the lowest auto loan rates. They are the way to go to save money in your next car loan application.

Hector Milla runs the Direct Auto Loan Lenders website, where you can get an instant approval auto loan regardless of your credit.