0% Car Finance

How 0% finance for cars works is simple.

It’s a finance plan that could be applied to car finance deals such as Personal Contract Purchase (PCP) or Hire Purchase (HP), which allow you to spread payments for a new car over 24 months or longer. The length of the agreement can vary.

With 0% car finance, you only pay back what you’ve borrowed. So, if you borrow £20,000 on a finance plan and pay it off across five years, you’ll pay back that £20,000 divided over 60 months.

No interest charges will be applied, so you won’t pay anything extra. That will save you money over the course of the agreement.

This is understandably a popular option if you’re looking to buy a new car, as most other finance plans include interest, where you pay back what you’ve borrowed plus the interest. However, there are other details to consider.

Most 0% finance on cars deals require a deposit - usually a minimum of 10% of the vehicle's value, but it sometimes can be as much as 50% - so you need to have access to that kind of money in order to secure any such deal.

Some 0% finance offers might be available on shorter agreements than other types of car finance, so you’re paying higher monthly amounts compared to other options.

Not everyone is eligible for 0% car finance. Terms and requirements vary, but if you have a bad credit score you may be declined a 0% APR plan. 

0% finance offers are relatively rare and often used for short-term promotions. This means you may find you have a reduced choice of makes and models if that’s the only type of car finance you’re prepared to accept. Even when such offers are available, they may only be for a limited time, so you’ll often need to act fast to secure one.