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Bottom Line Up Front

  • 0% financing deals may come with restrictions you’ll want to be aware of.
  • Consider whether other auto dealer offers make more financial sense for you.
  • Don’t jump at the first financing offer available; do research first.

Time to Read

4 minutes

August 9, 2022

Have advertisements for 0% dealer financing recently caught your eyes or ears? Whether or not you were in the market for a new car before the pandemic, an offer of 0% financing might be tempting. However, 0% financing can have several limitations. It pays to do your homework before contacting a dealership.

Zero In on the Fine Print

Here are a few details you’ll want to be aware of when taking a closer look at offers from dealers.

  • Credit score qualifications: Zero percent financing is typically limited to “qualified buyers” or those with “tier one credit.” This means you’ll likely need to have a credit score higher than 700 or 720 to be eligible for 0% financing.
  • Car model availability: If you have your heart set on a specific car model with premium features, it may not be part of the 0% financing special offer. The special financing may be limited to what’s in the dealer’s current stock and could exclude special orders, certain trim levels, option packages or premium models.
  • Term limits: Some dealers will only allow 0% financing for shorter-term loans, which means higher monthly payments. On the flip side, if they offer it for a long term, such as 72 months (6 years), you could be making car payments long after the car’s value is significantly lower than the amount owed. Many financial experts recommend having an auto loan term under 60 months (5 years). The quicker you pay off the car and own it, the sooner you’ll be in a more financially secure position to sell or trade in the car on your terms.
  • Down payment or trade-in options: Some dealers will promote “no money down” along with 0% financing as a great feature, but that just means you’ll be financing more. Having a down payment reduces the purchase price, and financial experts recommend putting down 20% if you can. Negotiating with a dealer to get a lower price and 0% financing can be more challenging. They may even say you can’t put money down or trade in a vehicle, so beware of those potential roadblocks.

Before Shopping, Do Your Homework & Get Preapproved

If you’ve been considering a new car for a while, the next few months might be a good time to buy if you can afford a new car and loan. But if you buy on impulse, it could mean getting the wrong car at the wrong time. It’s like buying a shirt on the clearance rack because it was “a great deal,” but it doesn’t fit right and was a waste of money if you can’t return it. Don’t let a special deal pressure you into buying a car you don’t want or really need!

Here are ways to take a thoughtful and careful approach to car buying.

  • Do your homework: Shop around online and compare different dealer offers. For example, some may be offering deferred payments, cash back, discounted sticker prices, online shopping tools and/or home delivery that could be more beneficial to you than 0% financing. Some dealers are also offering discounts for first responders.
  • Get preapproved: It’s wise to check with your financial institution and get preapproved for an auto loan before you go shopping. This way, you’ll know how much you can spend to stay in budget and have a loan ready to go if you choose not to finance with a dealer (or don’t qualify). Obtaining an auto loan at a financial institution you already have a relationship with can be helpful for making payments more easily or communicating if there are questions. It can also be easier to transfer funds and pay off the loan more quickly if you choose.

We’re Here to Help

Check out Navy Federal’s auto loan rates as part of your research. We always have our members’ best interests in mind and can help with great rates, an easy loan application process, quick decisions and military discounts.1 Check out our auto-buying resources, auto calculators and our auto learning center that can help you make a smart decision with zero regrets.

Next Steps Next Steps

  1. Dealers may have restrictions on their 0% financing offers, including credit score and car model limitations, term requirements and higher purchase prices.
  2. It’s smart to do your research on local auto dealer offers to determine whether 0% financing or another offer delivers the best financial value.
  3. Getting preapproved for an auto loan at a financial institution like Navy Federal gives you greater flexibility with your auto purchase options.



Direct deposit required. This military special may expire at any time. Applicants must contact Navy Federal by phone or visit a branch to receive the discount. Active Duty rate discounts (which are also available for retired military members) can be applied, subject to certain restrictions.

This content is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.