Zero interest car loans automakers

If you're interested in buying a car, you've probably seen a lot of low-interest special offers and incentives from various automakers. Many brands offer 0 percent interest, which suggests that you can finance a car and pay no interest over the term of the loan. Does that offer seem too good to be true? It may be, as we explain below.

Before we cover whether 0 percent interest is too good to be true, it's important to explain precisely what 0 percent interest is. To do that, we'll have to get into an explanation of car loans.

When you take out a car loan, you're borrowing money to pay for a car; that much is obvious. But the bank doesn't give you that money for free. Instead, you have to pay what's called interest, a fee that you give the bank for lending you its money.

For 0 percent loans, you pay no interest. That means you're borrowing money from a bank but paying no fee for the privilege of doing so. Essentially, 0 percent interest gives you the chance to pay the same amount of money as a cash buyer, even though you're spreading your payments over a longer term.

Since you're not giving the bank any incentive to lend you money, you might be wondering just how it's possible to get a 0 percent interest rate. The answer is that usually it isn't the bank doing the lending but rather the automaker itself.

Zero percent interest car

What You Need To Know About ZeroPercent Car Loans No Interest Sounds Great but Bonus Cash Could Be Better.