Don't Get Tricked by 0.00% Financing

Many auto dealers are offering 0.00% financing which sounds like a great deal but when you consider the factors, 0.00% financing may not be your best option. These offers are often used as a “teaser rate” to get you in the door. The problem with 0.00% financing is that not every potential car buyer qualifies for this super-low financing. The too-good-to-be-true rate applies to people with very high credit scores, excellent credit records and little or no debt. That means only about 5.00% of the population qualifies for the 0.00% rate.

You may be surprised to learn that even if you do qualify for 0.00% financing, it could cost you more in the long run. If the dealer offers you the choice of 0.00% or a cash rebate, taking the rebate and financing through HPCU could save you money—even if the rate is a little higher.

Some facts to think about before making the deal
  • Generally buyers must forfeit the manufacturer’s rebate if they choose the 0.00% financing offer
  • Buyers typically need to have a credit score above 700 to qualify for 0.00% financing offers
  • 0.00% financing is usually reserved for select vehicle models
  • 0.00% financing means you're essentially only paying for the car but add-on fees may be applied to recover the loss of interest
  • Many 0.00% financing offers are restricted to shorter terms; this can cause your monthly payments to be much higher
  • 0.00% financing offers are only available for new vehicle purchases

So let's do the math


  Dealer Financing Houston Police Credit Union
Vehicle Purchase Price $40,000.00 $40,000.00
Cash Rebate $0.00 $3,000.00
Amount Financed $40,000.00 $37,000.00
Interest Rate 0.00% APR* 1.99% APR*
Term of Loan 60 months 60 months
Monthly Payment $666.67 $648.39
Total Interest $0.00 $1,903.02
Total Payments $40,000.00 $38,903.02
Total Savings $0.00 $1,096.98

At the end of the day, the most important thing when determining if you should go with 0.00% financing or credit union financing is what’s going to be best for you. Explore all your options before making a decision so that you leave the dealership happy and ready to enjoy your new car!

* APR = Annual Percentage Rate. 0.00% APR financing and $3,000.00 cash rebate are for illustration purposes only and subject to availability with approved credit through select dealers and their network of lenders. Certain restrictions and other qualifications may exist. Not all buyers will qualify. See dealer for details. 1.99% APR based on loan term of 60 months or less for new and pre-owned autos and motorcycles year 2015 and newer through HPCU. Rate may vary based on longer term. Autos and motorcycles year 2015 and 2016 may qualify for a shorter term. Rate current as of June 1, 2020 and is subject to change based on market conditions and borrower eligibility. Qualifying HPCU criteria applies for all loans. Maximum qualifying term may vary based on year of collateral. Refinance restrictions apply. Current HPCU loans cannot be refinanced at this rate. Other qualifications may exist. Membership eligibility is required.
† Total interest, total of payments and total savings are estimates and assume that all installment payments will be made as projected on the scheduled due dates.

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