A car deal with 0 percent APR is hard to beat when it comes to finding a great deal. Numerous automakers offer interest-free auto loans to attract new, well-qualified customers and sell more vehicles. However, when shopping for a new vehicle, you should always proceed with caution, even if a zero APR offer is on the table. In some instances, getting an auto loan from an outside lender might work out better in the long run.
When you take out a vehicle loan, the lender will typically charge you interest in exchange for financing. Interest and fees, after all, are the primary ways that lenders make money. As you repay the loan, you reimburse the lender for the money it paid the auto dealer on your behalf. The interest you pay helps the lender earn a profit.
With a zero APR auto deal, however, you essentially borrow money for free. Your monthly payments reimburse the lender for the money it paid the auto dealer, but no extra money from your pocket goes into the lender’s bank account.