Check out the best new car deals, and you’ll notice that many of them share similar hallmarks, such as 0% APR finance offers. These 0% car finance deals are a tempting proposition because, provided you can put down the deposit required, they offer an easy way to spread the cost of a new car.

Finance deals offering 0% APR are less common than those with interest, but there are still plenty of manufacturers out there with offers that allow you to spread the cost of a new car into manageable monthly payments in an interest-free fashion.

A lot of these deals can be looked at and purchased online but don’t forget that you don’t have to limit your interactions to the purely digital – you can, and should, still go and test any prospective purchase in person, to make sure it’s right for you.

It’s also worth noting that 0% car finance deals are a savvy way to buy a car without paying interest, this type of agreement does have its flaws. Large deposits are usually required, plus you need a good credit rating to be eligible.

What is 0% interest car finance?

A 0% APR car finance deal effectively allows you to spread the list price of the car over a series of monthly payments without incurring any extra charges.

In short, you take out a loan but don’t get charged any interest. Lots of different manufacturers offer interest-free credit options, as do some individual dealer groups.

Generally, it’s available on Personal Contract Purchase (PCP) deals and Hire Purchase (HP) deals.

0% car finance deals UK: the small print

Do the usual best practices when taking out any form of financial agreement. Check and double-check the length of the agreement, the mileage limits, how much it is per month, and how much the balloon payment (optional final payment) is if you choose a PCP deal.

An important reminder: you’ll need to pay those payments every month – so make sure you can afford to pay it each time.

Do also check to see if the 0% APR is fixed for the length of the agreement. Generally, with manufacturer-backed finance, it will be – but it’s worth researching.

Look at the T&Cs, too. See how much the charges are for going over the agreed mileage limit, what to do if you miss a payment, and what to do if you damage the car. This will help you avoid any surprises.

Car manufacturers must adhere to Financial Conduct Authority rules. This body regularly publishes reviews into the motor finance section, including interest-free cars, so you can check for additional information and insight.

0% APR car finance pros

• Not charged any extra for spreading the cost of a car over a set timeframe

• Big savings to be made. Typical car deals can add thousands of pounds in interest charges over the course of an agreement. With 0% APR you negate this

0% APR car finance cons

• A hefty deposit is usually needed to secure these deals

• Terms are generally shorter than traditional PCP or HP contracts. This means higher monthly payments, but you have the chance to own the car sooner, too

• You have to have a good-to-excellent credit score and a strong credit history to be applicable for 0% APR car finance

• Other discounts offered by dealers and car makers can rarely be used in conjunction with 0% APR car finance deals

Interest-free car finance alternatives

Leasing, otherwise known as Personal Contract Hire (PCH), is a form of long-term rental. There is no APR attached because you’re not borrowing any money – you’re just renting the car.

Leasing offers an elegant short-term solution to 0% APR car finance. It’s especially useful if you don’t want to own the car, don’t want to keep a car for a long time, or don’t have a strong enough credit score to be accepted for 0% APR finance.

You may also encounter 0% APR finance deals involving an Advance Payment Plan (APP). These offers, which aren’t common, typically require a 50% deposit and have no monthly payments.

These give you the choice of keeping the car at the end, if you pay the remaining value, or you can hand it back. However, they often aren’t great value for money.

Halal car finance technically offers interest free cars, but there are some caveats.

Can I get 0% finance on used cars?

All the offers in this article are for new cars. That’s because while 0% APR deals are available for used cars, they usually aren’t as good value as they may first appear.

When used cars come with no interest, it usually just means that the seller has taken the money they would have made from the APR and added it to the list price.

For example, a £10,000 used Nissan Qashqai on a Hire Purchase agreement with a 5% APR rate would see the total cost come to £10,500, assuming for ease that the contract is for 12 months. £10,000 for the car, £500 in interest.

A dealer offering no APR might just raise the price to £10,500.

0% PCP car car deals 2024: for the full list CLICK HERE >