While the average value of a new vehicle has risen to around $10,000 over the past five years, car buyers are rightly suffering from sticker shock, and the affordability factor is exacerbated by the rates of financing that have practically doubled since 2022. lately the other way around, but it is still very expensive to borrow money for a new car. According to the Experian credit bureau, those with fair credit scores pay an average of 10. 37% to finance a new car, truck, or SUV.
However, savvy (and creditworthy) buyers can take advantage of what amounts to a plethora of discount financing schemes introduced through automakers’ captive financing divisions as part of their year-end promotions. Rates as low as 0. 9% to 2. 9% are common, with a significant number of models presented with 0% financing this month for 72 months. We discovered 47 such deals on 2024 and 2025 cars and listed them below. As with the biggest end-of-year discounts, many 0% loan offers are for fully electric vehicles, still saving money with lower operating costs.
In a separate post we ran through all the models being offered with generous cash rebates at what is historically the best time of the year to buy a new vehicle. Dealerships are typically going all out to move the metal, both to meet year-end quotas and to winnow down excess inventory, especially of what are now last year’s models. The week ahead should yield the best deals, with Christmas Eve and especially New Year’s Eve being the optimal days to go car shopping.
For some buyers, especially those looking to get behind the wheel of a costly full-size pickup truck or luxury car, choosing a low-interest rate instead of a modest cash rebate can be the better deal. For example, a buyer taking out a $50,000 loan for 60 months at the aforementioned 10.37% would pay $14,289 in interest over the life of the loan, according to the auto loan calculator at Bankrate.com. Score a 2.9% promotional rate and that amount drops to $3,773. Take advantage of 0% financing and the interest paid is, well, zero.
But automakers’ low-rate loan promotions have a catch, and they refer to the colloquialism “for well-qualified buyers. ” This means having a top-notch credit score, among other favorable factors. Applicant lenders with lower credit scores are riskier than those with higher scores, which means they will sometimes be charged higher financing rates.
Lenders evaluate an applicant’s creditworthiness based in large part on his or her “FICO” score, which is created and curated by the Fair Issac Corp. FICO scores are largely based on a person’s payment history and outstanding balances, among other factors. They range from a rock bottom 300 to a maximum of 850. In fact, most auto lenders depend on an industry-specific version of the FICO Score tailored to be a better predictor of a borrower’s ability to pay a car loan on time. While standards can vary from one financing source to another, the higher the FICO score, the better chance there is of qualifying for a promotional interest rate.
According to FICO, prime borrowers have a score of 720 or higher, followed largely by those between 690 and 719. Those with lower scores are “subprime” and will be required to pay what may also simply be a particularly high interest rate. Those with the lowest credit scores would likely be denied the loan entirely.
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