As the average value of a new vehicle has soared to around $10,000 over the past five years, car buyers are rightly in for a shock as the affordability challenge is exacerbated by higher financing rates. which have almost doubled since 2022. They are slowly heading in the other direction lately, but it is still very expensive to borrow money to buy a new car. According to the Experian Credit Bureau, those with adequate 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 becomes a plethora of downgrade 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 widespread, with a significant number of models featuring 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 year-end rebates, many 0% loan offers are for all-electric vehicles, saving even more money with lower operating costs.
In a separate article, we review all the models that are offered with generous cash back at what is traditionally the most productive time of year to buy a new vehicle. Dealerships generally go to great lengths to move metal, whether it’s to meet year-end quotas or to make excess inventory transparent, especially those that are now last year’s models. Next week will offer the most productive deals, with Christmas Eve and especially New Year’s Eve being the optimal days to buy cars.
For some customers, especially those looking to get behind the wheel of a full-size pickup truck or expensive luxury car, opting for a low interest rate instead of a modest cash refund would likely be the best option. For example, a customer taking out a $50,000, 60-month loan at the aforementioned rate of 10. 37% would pay $14,289 in interest over the life of the loan, according to Bankrate. com’s auto loan calculator. Get a promotional rate of 2. 9% and that drops to $3,773. Take the credit for 0% financing and the interest paid is zero.
But automakers’ low-interest loan promotions have a drawback, 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, top-tier borrowers have a score of 720 and above, with those at 690-719 coming in at a close second. Those having lower scores are considered “subprime,” and will be asked to pay what could be a considerably higher interest rate. Those having the lowest credit scores may be denied a loan altogether.
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