If you are in the market for a new car, deals like 0 percent car financing in Canada can be appealing.Â
With the soaring interest rates today, financing deals with low-interest rates can be tough to find, making zero-financing deals very attractive.
Read on to learn about 0% car financing, how to finance a car in Canada and some of the top financing deals on various vehicles.
What Does 0 Percent Car Financing Mean in Canada?
You have likely heard about 0 percent car financing and wondered how to purchase a car without paying interest.
So, what does 0% financing mean when buying a car?
As the name insinuates, 0% financing means you buy the car without interest. Since financial institutions do not work that way, it only indicates that this deal is not from a bank.
It is because only dealerships offer zero percent financing. They can afford to provide these deals because they can still earn a profit despite paying the interest themselves.
Dealerships offer 0% financing for several reasons, such as to meet sales quota, bring in more business, or make room for new inventory.
This deal, however, is not available to everyone as dealerships often offer to consumers who already qualify for a low-interest rate, particularly consumers with excellent credit.
How To Finance a Car in Canada
There are various sources of financing for your car in Canada. These give buyers a range of options to own a car even if they lack the cash to buy it outright.
Three primary sources of financing these days are banks, online lenders, and car dealerships.
So, how does financing a car work in Canada?
When you have shopped around for a car and decided to pay for it through financing, choose where you want to apply for a car loan.
As mentioned, you can choose between a bank, an online lender, and a dealership. When you have decided where to obtain car financing, fill out an application for a car loan.
Provide the required information and documents, which include a valid Canadian driver’s license, pay stubs, and proof of income.
After confirming your information, the lender will perform a credit check to determine your capability to make car loan payments.
If you apply through an online lender, you will get various loan options based on the information you provided.
The loan offers will furnish the details on your interest rates, fees, repayment terms, and loan duration.
After you decide to accept the loan agreement, you can sign it and drive off in your new car. You then make the monthly payments until you repay your loan completely.
If you default on your payments, your lender can repossess your car.
How To Get 0% Financing in Canada
Getting 0% financing in Canada may require doing your due diligence to find the best offer.
- Check your credit score. To get 0 percent car financing in Canada, you must meet the primary requirement: a credit score of 760 or higher.
- Look for 0% financing offers. Shop around for the car you want to buy. Contact dealerships and confirm if they are currently offering 0% financing.
- Visit the dealer. Bring the information and documents showing your credit score and monthly income. The dealer will determine if you are eligible for 0% financing.
- Negotiate the offer. Work out the best deal possible on your vehicle loan.
What Car Dealerships Are Offering 0% Financing?
There is an ongoing shortage of new cars, and interest rates have been soaring. These two factors have affected zero percent financing offers today.
Many car dealerships used to advertise 0% financing deals, but the present market has made it challenging for dealerships to offer zero-interest financing options as they did before.
For anyone looking for what car dealerships are offering 0 financing and discounts on new cars, you can check out the Ontario Chrysler Jeep Dodge Ram dealership.
Other dealerships are offering low interest rates rather than zero percent financing.
What SUVs Have 0% Financing Right Now?
At the Ontario Chrysler Jeep Dodge Ram dealership, you will find 0% financing for a 2023 Jeep Grand Cherokee, with terms of up to 60 months.
No 0 financing offers from industry giants Toyota, Ford, and Nissan in Canada are currently available.
Meanwhile, other SUVs are made available at lower rates, with the following offering some of the lowest APRs:
- 2022 Ford Edge – 1.99% to 2.99% (up to 60 months)
- 2023 Subaru Outback/Forester – (3.49% for 24 months)
- 2023 Chevrolet Equinox – 3.99% (up to 60 months)
- 2023 GMC Acadia – 3.99% (up to 60 months)
- 2023 Subaru Solterra – 3.99% (24 months)
Related: Best and Most Reliable SUVs in Canada.
Pros and Cons of 0% Car Financing
Pros
- 0% interest
- Shorter repayment term
- No need for comparison shopping
- It saves you hundreds or thousands of dollars
- Option to upgrade
Cons
- Offered at car dealerships only
- Difficult to qualify
- Higher monthly payments
- Offer may be for a short promotional period only
0 Percent Car Financing Alternatives
Other car financing options are available for you to use instead of 0 percent car financing. These are easier to qualify for as the requirements are less stringent than the 0% financing alternative.
Online Car Loans
Online car lenders such as CarsFast and Loans Canada can help you obtain the funds to finance your new car.
CarsFast
CarsFast is a comparison website that provides access to different car financing alternatives through its network of dealers.
Applying for an auto loan is as fast as two minutes, and the approval process is quick. After submitting your application, you get quotes from several lenders.
CarsFast requires no collateral. The repayment terms can be as long as 96 months. It also accepts borrowers with bad credit.
CarsFast has its own inventory of new and used cars, so you can submit your loan application right after shopping for your vehicle.
Check out this CarsFast review.
Loans Canada
Loans Canada is a lending platform that assists people looking for financing by matching them with lenders that can provide what they need.
Using the loan application form on its website, you can obtain financing offers from different lenders regardless of your credit score.
Loans Canada offers various types of loans, including car loans. Through the platform, you will find lenders that offer the best interest rates and terms for your car financing.
Once approved, you can access the money within 48 hours. Furthermore, you can complete the entire car financing process in the comfort of your home, as the case is with most online lenders.
Learn more about Loans Canada in this explainer.
Guarantor Loans
A guarantor loan is a type of loan wherein you have an individual with a good credit score co-sign your loan application so you can qualify for it.
It can be an ideal way to obtain a car loan if you have a poor credit score. You will need to ask a trusted friend or family member with a good credit score to secure a better interest rate.
If you can get someone who will guarantee the loan, you can secure a larger loan than you would if you applied by yourself.
Guarantor loan amounts can be up to $10,000 and often have higher interest rates than a typical car loan.
Your guarantor must have a good to excellent credit score, a decent debt-to-income ratio, and can show proof of a stable source of income.
Is 0% Financing Worth It?
The interest rate is one of the chief factors that impact your loan, so if there is any way to get a lower one, it would be welcome. But not paying interest would take the cake.
At first glance, 0% financing is every car shopper’s dream. But is it worth it?
As mentioned, not everyone will qualify for this deal since a large proportion of the Canadian population does not have the credit score it requires.
Besides that, there are other points to consider. One is that 0% car financing deals are not offered for most vehicles, only a few.
Additionally, the deal may be an introductory offer or applicable only for a few months.
These offers also have shorter repayment periods, which means higher monthly payments that increase the risk of defaults.
Despite these, 0% car financing can be beneficial if you have a good credit score, an established credit history, and a stable income.
If you fall under this category, you will likely find this deal a means to save hundreds of dollars over the long term.
FAQs
According to data from CarLoansCanada, the bank with the best car loan rate in Canada is the Royal Bank of Canada. It offers 7.29% – 8.99% for loan terms less than 78 months, 7.29% – 9.49% for loan terms between 79-84 months, and 7.29% – 9.99% for loan terms over 85 months.
The car brands offering the lowest interest rates in Canada are Ford, GMC and Chevrolet. They are currently running promotions where interest rates range from 1.99% to 3.49%.Â
Yes, they can for as long as they meet all the eligibility requirements and documentation. Many financial institutions offer flexible car financing options to non-residents and foreign workers. Check with your lender to learn what you must submit when applying for car financing.Â
Canadians pay around $400 to $800 monthly for their car loan. The three variables influencing the monthly payment are the car price, the interest rate, and loan duration.
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