How 0% car finance works
The amount financed is divided by the number of payments. With no interest and no fee, the total repaid equals the amount borrowed, so the APR is 0%.
Many 0% offers are only free if you pay a deposit or accept a shorter term. Some add an arrangement fee, which pushes the effective APR above zero even though the rate is 0%.
Worked example
Borrowing £18,000 over 48 months at 0% gives 48 payments of £375, and the total repayable is £18,000.
Against a normal car loan at 8%, the interest saved is £2,979.73. That is the value of the 0% offer to you, before any fee or deposit conditions.
Watch the conditions
0% deals often require a minimum deposit, a shorter maximum term, or a particular model. If you would not otherwise buy that car, the saving is not real.
Check the total price as well as the rate. A 0% deal on a car at full price can cost more than a discounted car with a low-rate loan.
Inputs for the 0% APR car loan calculator
Amount borrowed
The amount financed after any deposit.
Term
The number of monthly payments.
Upfront fee
Any arrangement fee you pay to get the 0% deal. Enter 0 if there is none.
Compare with a loan at
The APR you would otherwise pay, used to work out the saving.
CALCULATOR QUESTIONS
0 apr car loan calculator questions
Is 0% APR really free?
Only if there is no fee and you would have bought the car at that price anyway. A fee or a higher price can cancel the saving.
How much does 0% save on £18,000 over 48 months?
About £2,979.73 compared with an 8% car loan, which is the interest you would otherwise pay.
Does a 0% deal affect my deposit?
Many require a deposit. The calculator takes the amount after any deposit, so enter what you actually finance.
What is the catch with 0% finance?
Usually conditions: a minimum deposit, a shorter term, a specific model, or no discount on the price. Read the agreement.