What is 0% APR Car Finance?
Thinking about spreading the cost of your next car without paying extra in interest? That’s where 0% APR finance comes in.
APR stands for Annual Percentage Rate, which is the rate of interest a lender usually charges for borrowing money. With 0% APR, there’s no interest added, so you simply pay back the amount you borrowed and nothing more.
Just like other finance options, you can spread the cost of your vehicle over an agreed period with manageable monthly payments. The key difference with 0% car finance is that every penny you pay goes directly towards the vehicle. There are no added interest charges during your agreement.
Disclaimer: Please be aware that, while an initial soft search is made to check your eligibility for finance, to be approved for low-interest car finance offers, a further hard credit search will be required.
Representative Example (PCP):
Borrowing £19,121.23 over 48 months with a representative APR of 11.36%, the annual interest rate of 6.46% (Fixed) and a deposit of £1,266.23, the amount to finance would be £17,855.70, paying £323.72 per month, with a total cost of credit of £6,194.43, an optional final payment of £8,511.57 and a total amount payable of £25,715.36 (incl. £399 option to purchase fee).
This represents an average of the deals that our customers receive on other vehicles. We are a credit broker and a lender. We can introduce you to a limited number of lenders and their finance products. We will provide details of products available, but no advice or recommendation will be made. You must decide whether the finance product is right for you. We do not charge you a fee for our services. Lenders will pay commission to us (either a fixed fee or a fixed percentage of the amount you borrow) for introducing you to them, this may be calculated in reference to a variable factor such as (but not limited to) the vehicle age, your credit score and the amount you are borrowing. Different lenders may pay different commissions for such introductions. Offers available to everyone over the age of 18, subject to credit approval.
How Does 0% APR Finance Work When Buying a Car?
0% interest car finance is typically offered on either a Personal Contract Purchase (PCP) or Hire Purchase (HP) agreement. Both options let you spread the cost of your car into fixed, manageable monthly payments.
When you see an APR on a finance offer, it shows the interest charged on top of the vehicle’s price. Put simply, the higher the APR, the more you’ll pay overall, and the lower it is, the less you’ll pay.
For example, if you borrow £10,000 at 9% APR over one year, you’d repay around £10,900. That extra £900 is the cost of borrowing. With 0% APR car finance, that additional cost simply doesn't exist.
So, if your chosen car costs £25,000 and you put down a £5,000 deposit, the remaining £20,000 is split into equal monthly payments over your agreed term, and that’s all you’ll repay.
Are 0% Car Financing Offers Available on New and Used Cars?
0% finance can be found on both new and used cars, though they are most commonly available on new vehicles through manufacturer-backed promotions.
Car manufacturers often introduce interest-free finance on selected models to boost sales, which can make it a great time to buy, especially if the car you’ve got your eye on is included in one of these offers.
At Stoneacre, we work with many of the UK’s leading car manufacturers, putting us in a great position to help you find the right car at the right price.
Interest-Free Car Finance Advantages and Disadvantages
Benefits of car 0% APR financing:
- You pay no more than the car's listed price
- Predictable, fixed monthly payments make budgeting easier
- Keep more of your savings available whilst spreading the cost
- Shorter terms can help you pay off the car more quickly
What needs to be considered:
- Higher monthly payments due to shorter contract lengths
- A larger-than-normal deposit is often required
- Can be limited to specific models or promotional windows
- Less flexibility on term length compared to standard APR deals
- 0% car finance acceptance requires a robust credit rating
How to Apply for 0% Interest Car Finance
Before you start searching for 0% finance cars, it’s worth checking your credit score.
Knowing where you stand gives you a clearer picture of the offers available to you and helps avoid any surprises during the application process.
You can get started with our online eligibility checker. It uses a soft search, so it won’t have any impact on your credit score.
Once you’ve submitted your details, a member of our dedicated finance team will be in touch to guide you through your application and talk through the next steps.
It’s also worth keeping in mind that 0% car finance is typically available to customers with strong credit ratings. If your score is lower, it may be more difficult to qualify, but there may still be other finance options available to you.
