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what credit score is needed to get 0% auto financing
I'm trying to decide whether to pay cash or finance a new car purchase in a few months. I have good credit so I shouldn't have any trouble getting financing, but I would only want to use a loan if I could get 0% interest for three years or thereabout. I am hoping to get an idea ahead of time. Thanks in advance for your help!

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Do not assume 0% is always good.

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First to answer your question, look, listen and read the ad's for a zero interest loan. "VERY WELL qualified purchaser". Meaning in at least the 700's probably 750 or above.

Now, do not always assume that zero percent interest is the way to go. Although vehicles are not this cheap anymore, lets pick a $15,000 vehicle.

The dealership offers a $2000 rebate OR zero percent interest on a three year loan. Take the rebate....... pay the interest, use the rebate.

$15,000 / 36 months = $417 per month. Total = $15,000 paid.


$15,000 - 2,000 = $13,000 financed @ 4.5% = $387 per month = $13,922 paid. (still 36 months).

You saved over a thousand dollars by paying the interest plus your monthly payment is about $30 per month cheaper. Crunch the numbers, what sounds good is not always good. The dealership lost $2,000 but the finance company made $922. They will like you even more and increase your credit score.

Again, these are fictional numbers. Crunch your numbers, interest, and time of the loan plus rebate.

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Valuable information. Thanks for the info and the breakdown of everything; VERY Helpful advice.

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Wow, Personally, I appreciate knowing this strategy in car buying.  Will remember this when my credit score improves and I'm shopping again in the future. 

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Your numbers are wrong in the second example.  You forget the interest is an ANNUAL percentage and your loan is a 3 year loan, therefore you need to compound the interest amount by 3 for the length of the loan.  In other words....$13000 financed @4.5% is $585 per year, multiply that by 3 years and the total interest is $1755 making the monthly payment $409.86.  Therefore this method only saves about $6.81 per month or $245.16 for the full loan term of 36 months.

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I am no math wiz, but in your equation above total for 0% is $15,000, where as financing is the $13,922 + $2,000 that was up down so total is actually $15,922.  No matter what you finance you will always pay more with increased interest.

The amount that you put down actually decreases your monthly payments, but not significantly, usually month dollars to $20 max really, unless you jump from 2k down to 5k down.  Best thing to do is if you have to finance is to make a spilt monthly payment just like with a house loan, it cuts the interest monthly.

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The dealership cannot offer a rebate.  The rebate comes from the manufacturer.  When you take a rebate the dealership loses nothing as the manufactuer covers the rebate.  The dealership can offer a discount but not a rebate.

Typically, the offer is zero percent financing or the rebate.  Often, they even out over the life of the loan.  That means the interest saved using the zero percent versus the going rate is often about the same as the rebate.  The manufacturers know math.

Your example is skewed.  These days the rate offered by the captive financing, manufacturer's finance arm, is much lower than 4.5 percent when offered in conjunction with a rebate.  Typically the rate is around 2 percent.  For folks with great credit.

Using your $15,000 number, which is usually too low for a car which would have a $2,000 rebate, the total interest paid on a 36 month loan at 2 percent would be $480.  At 36 months the total interest would be $780.  Therefore, using the $15,000 in your example the best choice would be to take the $2,000.  As you noted.

A better price for a $2,000 rebate is more like $25,000.  For a 36 month loan at 2 percnt the total interest paid would be about $776, at 60 months to total interest would be $1,280.  Still better to take the rebate.

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And Cemoore is wrong.  You do not pay the same amount of interest every year on a car loan.  Every month the loan balance drops due to your car payment.  Interest is comuted monthly on the loan balance.  The loan balance is the amount of the loan reduced by the amount of the loan paid. The monthly payment includes a payment of the loan as well as interest.  Each month the loan balance decreases and the amount of interest paid decreases as well.

On a car loan the interest is not compounded.  The interest is paid each month.  No compounding.

Using his example, $13,000 over 36 months at 4.5. percent, the monthly payment is about $387.  The total interest paid over the full 36 months is about $932, not $1,755.

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No, his calculations are correct. Total paid $13922. The reason is that the principal decreases monthly, so with each payment less interest is charged. Interest is not calculated up front in a lump sum as you did. It is typically compounded monthly even though they call it APR. [For more info, Google "Effective Annual Rate"] CK has an Amortization Calculator you can use to test out paying $15000 @0% for 36 months vs. $13000 @4.5% for 36 months. 

The Amort. Calculator also is a useful tool to show you how powerful making a downpayment is, especially on longer loans. 

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I don't know what is required for 0%, I always assumed you needed perfect credit.

I never looked into low finance offerswhen my credit was perfect. I always had alot of equity in my trades and the rebates in lu of 0% made more sense to me. Domestic pickup rebates can be $4000-$9000.

My credit recently took a large hit down to 680. So when i was shopping for a new truck, I checked with aaa, to see what i would qualify for before going to the dealer.AAA aproved me for 2.49% for 4 years.

After settling on a price at the dealer, They included a $500 rebate to use chrysler capital.When they came back with 4.99% this seamed fair with the rebate. I did the math and decided aaa was the better option. When I told them this they weren't happy, but came back and matched the 2.49% and a total of $7,000 in rebates including $500 for taking the %2.49 ( I also got $3,500 off the sticker price as well).

My point is I never thought i would qualify for this rate but prequalifying before i went in gave me the confidence to push the dealer and get a great deal.

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when you check into what you were "pre-qualified" for, did they hit your credit score with a hard inquiry?

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Wow I have AAA Towing service I need to check it out thanks

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720 or better

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I've been involved with auto finance for years and it depends on the manufacturer and, to a lesser degree, the dealership.  I have never seen anyting below 720 receive 0% financing but most call for 740+.  Hope this helps

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Finance Dept. in Dealerships

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FYI.   Car dealerships make a lot of money on the finance end of car deals.  

They submit your information to the lenders.  They get the approval back from the finance company/lender with your interest rate also.  Unfortunately, many times that is not the interest rate you actually pay.    The finance department then, can and will, add a point or two to make money for their department.  You will never know the difference.  

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When a dealership fianances your car your they get 2% of the fianance rate. you are better off finding your loan for the car by yourself.Enter Your Reply

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They will try, but that is why you need to goin prepared by being prequalified at a bank or credit union. Last vehicle I bought we went in knowing we has a 3% rate at the credit union. The dealership finance girl said "Great news! We can get you a 6% rate!", I said no thank you we are already qualified for 3%. She was quite miffed that I knew what rates were and kept pressing for us to take her offer, recalculating and gradually lowering the rate until it was within a quarter percent. I didn't budge on the rate and said I'd come back with a check.

The department manager even got in on it at the end and tried to push for us to pay the slightly higher rate. When I brought up that they were going to profit from the rate, he acted almost offended and declared they wouldn't make much. I then told him I don't care if he isn't going to make much from the financing, it's going to cost me more every month and I don't see a reason to pay it when I have cheaper financing already lined up. An extra $10 doesn't seem much, but over 60 months it adds up to $600!

Bad rates and high pressure tactics. And these people wonder why buyers are apprehensive and later talk bad about used car salespeople!

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**** good question

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We are in the market for an auto and are looking at the Toyota 0% financing for 36 months.  Just curious who has qualiifed for this and what your score was?

Zip I did ask my dealer how to qualify and here is what they replied.

-   Length of time at Residence (1-2 years is good)

-   Length of time at Employer (1 year plus is good)

-   Tradein equity if applicable. (too much negative equity may not carry on the new vehicle)

-   Credit score above average. (please use our credit estimator if you don't want to pull credit, it only asks questions to get an idea, it doesn not collect your SS#.. here is the link:

-   Car credit payment history. (late payments or repos)

-   Monthly debt to income ratios (percentage of outgoing debt pay plus new loan should not be an overwhelming percentage of income)

-   Percentage of income dedicated to new loan.

Hope this helps.  Anyone else with credit score info that can help would be greatly apprecaited!!

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I can say that it's what's in your credit file that also counts.  Being responsible to handle credit will count more than you think.  You can have a 700 score and still get 0% financing. They want to see that you can handle credit wisely.  When I started using this site I had a mtg & a used car payment with 1 Cap One card.  It's been 3 yrs and I now have a new car lease (with the payments I wanted), a motorcycle loan, and yes, 18 cc's!!!  Never, ever pay anything late, and alway keep utilization at no more than 30% or pay in full every month.  You can learn a lot on here and how they want you to handle your credit.

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I applied and received 0% credit with a score of 767. If more people would do this, we can determine what is the LOWEST score to achieve 0%.  Come on and help out

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credit score for Toyota zero percent

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Anything above 650 credit score will land  you zero percent financing. If you dont get it, the finance manager is bull****ting you

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Don't think so,  LOL

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good thing. thanks for the advice ;)

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Some years ago when I first bought my home my car went out and I went in search for a another car (used) and went to a Nissan dealer based on their radio advertisement so I saw a used Altima I was interested in , they went in the back came out and told me I had bad credit and that my payment would be around $480.00 I must have looked like boo boo the fool they warned me that I wouldn't get a better deal than that because of my credit I said no thanks went to another dealer and got into a car for $279.00 a month for 3 years. So, shop around my score was in the 700's

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Yeah, "right".........I would have to disagree with that statement.

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car loan

Helpful to 28 out of 31 people

First of all, get away from a bank. Join a credit union, loans are less, interest on credit cards and car loans are much less.  You do have to have a good credit score, but you and always open a saving account.  After a year of so open a checking account.  All your "bank" issues will go away.

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answer to your question

Helpful to 87 out of 111 people

To be honest with you , there is no tried and true response. I worked at one of the big three finance companies and I saw contracts where two people with the exact same credit score where given entirely different rates.  If you are able to pay cash for your vehicle , then you are  in a better position to determine the price you are going to pay.  If you don't have to use a dealer's financing options, then you are in charge of the deal. Don't accept the price they are giving you, there i the sticker price and then there is the dealer price and trust me, you can get closer to the dealer price if you can pay cash for your vehicle out right. hope this helps.

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Actually paying cash for a vehicle often results in a higher price.  The reason being dealers view a cash buyer as one who will not offer addtional profit in the back end, the F&I office.  Deales will often sell at a lower price if they believe they will make profit through financing or from those various products they sell in the F&I office.

Even if a buyer is paying cash, there is no need to disclose this when negotiating the price.  It is usually better to have the dealer believe the buyer will finance. 

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I agree with scarhill's comment completely. There are always spiffs from the Finance Manager's office so it's never in a buyer's best interest to pay cash or even let on that they can. Also, putting tons on your down payment isn't always the smartest way to go. Put down enough to get super low interest even if you could pay for it all that day; they will make you a better deal -- and then when your first or second payment comes due just plunk down the payoff amount then. You get a responsible loan on your account, the salesperson works harder to get you a good price because he's going to get a finance commission bonus, and you all win. (I processed sales contracts for a Cadillac dealership for many years and have seen a lot.)

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Dealers and their bonuses

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Do your homework before buying a new or used car, unfortunately businesses only make good money when you lose.

If you need to finance, credit unions may offer friendly rates and, you'd know upfront how much of a car you can afford. Plus walking into a dealership with your pre-approval, you'd have just as much negotiation leverage, as if you had cash.

Now if you must buy a brand new car, that 0% apr is appealing, no doubts.

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so you know

Helpful to 6 out of 6 people

I worked dealerships for 25 years and most are scumbags their strategy is to get you excited about the vehicle then wear you down with all the negotiations and NEVER LET THEM KNOW YOUR A PAYMENT BUYER then they can do just about anything they want behind the scenes and you will be sure to pay at least $50 more on the payments.

Okay now that you are tired and hungry they finally send you into the lion's den called finance department were they will use every term to baffle you into thinking they are your friend and working hard for you to get you the very best deal possible but trust me when I say they are the worst con artist in the company. Their whole job is to get every single penny they can squeeze out of you!!!!!

This includes getting the zero percent, just because you get that they will try to add in all kinds of other services like remote entry, security system and my favorite the paint or desert protection package.

Do not be afraid to walk away at anytime also do not give up your keys to your trade in until the deal is done and your happy. They will come up with excuses to keep you there like holding your trade hostage so they can reason with you.

Good luck

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great post Jimbo, I am planing on purchasing a luxury vehicle and after all the research everything points towards geting a loan from a bank and not the dealer. ie getting the money for the car from the bank and paying the car cash at the dealer and then paying off the loan payments with the bank. would you say thats a better idea? 


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