A 0% car loan is a financing deal that can save you hundreds if not thousands of dollars on your vehicle purchase. Some dealerships offer such financing deals to entice buyers. That said, 0% is not available everywhere and to everyone. Read on to find out more about 0% car financing in Canada, and the eligibility requirements needed to qualify. For the bigger picture, you can also compare the best car loans in Canada.
Key Points
1. Zero percent car financing means there is no interest charged on the loan.
2. While a 0% financing deal may sound appealing, there may be caveats that come with it, including more restrictions and stricter eligibility requirements.
3. Car dealerships tend to be the only source for 0% car financing, as lenders have little incentive to offer such deals.
What Is 0% Car Financing?
Zero percent car financing allows consumers to take out a car loan to finance the purchase of a vehicle with no interest charged. That means the entire portion of your car loan payments goes towards the purchase price, and not interest, saving you thousands of dollars over the life of the loan.
It should be noted that only those with excellent credit are typically able to get approved for this type of financing. Since availability varies from month to month, it’s worth checking the latest 0% financing deals by brand to see who is offering 0% right now.
How Does 0% Car Financing Work?
A 0% offer doesn’t mean the interest simply disappears; it means the cost is being absorbed somewhere else. These deals are almost always offered through a manufacturer’s own financing arm, known as a captive lender (such as GM Financial or Toyota Financial Services), rather than a regular bank. The manufacturer subsidizes, or “buys down,” the interest rate as a promotional incentive to sell more vehicles and clear inventory.
Because the automaker still makes its money on the vehicle sale itself, it can afford to offer 0% on the financing. A traditional bank or credit union, on the other hand, has no inventory to move and earns its money from interest, so it has little reason to lend at 0%. This is also why 0% offers are usually limited to specific new models, shorter terms, and buyers with excellent credit, since the manufacturer targets the incentive where it helps sales the most.
0% Car Financing Features
Before diving into the details, here’s a quick look at the typical features of a 0% car financing deal in Canada.
| Feature | What To Expect |
|---|---|
| Interest rate | 0% APR, meaning no interest is charged on the amount you finance |
| Loan term | Usually shorter than average, often 24 to 60 months |
| Eligibility | Excellent credit required, typically a score around 700 or higher |
| Car type | New vehicles only; used cars almost never qualify |
| Models | Select promotional models, often ones the dealer wants to clear from inventory |
| Where to get it | Manufacturers and dealerships (through captive lenders), not regular banks |
What Are Captive Lenders?
A captive lender (also called a captive finance company) is a lender owned by a manufacturer to finance purchases of that company’s own products. In the car world, it’s the automaker’s in-house financing arm, and it’s almost always the source of a true 0% financing deal.
The difference from a bank comes down to motive. A bank only makes money from the interest it charges, so it has little reason to lend at 0%. A captive lender’s real goal is to sell more of its parent company’s vehicles, so the automaker can direct it to offer a below-market or 0% rate as a sales incentive. The manufacturer absorbs the interest cost because it still profits from the vehicle sale itself. This is why 0% financing almost always comes through the dealership and the manufacturer’s captive lender, not a third-party bank or credit union.
| Automaker | Captive Lender |
|---|---|
| General Motors (Chevrolet, GMC, Buick, Cadillac) | GM Financial |
| Ford | Ford Credit |
| Toyota and Lexus | Toyota Financial Services |
| Honda and Acura | Honda Financial Services |
| Nissan | Nissan Canada Finance |
| Volkswagen and Audi | Volkswagen Finance |
How Much Can You Save With 0% Financing?
The whole appeal of 0% financing is that you borrow at no interest, so the money you save is simply the interest you would have paid at a normal rate. The larger your loan and the higher the rate you’d otherwise pay, the more you save. Here’s roughly how much you could save on a 5-year loan compared to an 8% interest rate.
| Loan Amount (60-month term) | Interest At 8% | Interest At 0% | You Save |
|---|---|---|---|
| $20,000 | $4,332 | $0 | $4,332 |
| $30,000 | $6,497 | $0 | $6,497 |
| $40,000 | $8,663 | $0 | $8,663 |
As the table shows, 0% financing can save you thousands of dollars, and the savings grow with the size of your loan and the rate you would otherwise be charged. Just remember to weigh those savings against any cash rebate you might have to give up, as explained below.
Difference Between 0% Financing Vs. Cash Rebate
Some dealerships may offer a cash rebate as an incentive to encourage consumers to buy their cars. Before you choose a cash rebate over 0% financing, or vice versa, it’s important to crunch some numbers to see where you’ll save the most.
To illustrate the difference between 0% financing and a cash rebate, let’s say you want to buy a car for $40,000. One dealership is offering a financing rate of 8% and a cash rebate of $6,000, while another offers 0% financing, but no cash rebate. Assuming a 60-month loan term, the following chart compares the costs between the two deals:
| 0% Financing / No Cash Rebate | 8% Interest With $6,000 Cash Rebate | |
|---|---|---|
| Car Loan Amount | $40,000 | $34,000 ($40,000 minus $6,000) |
| Interest Rate | 0% | 8% |
| Term (months) | 60 | 60 |
| Monthly Payment | $667 | $689.40 |
| Total Interest | $0 | $7,363.84 |
| Total Cost | $40,000 | $41,363.84 |
As you can see from this example, you’d be paying over $1,300 more overall with the cash rebate option. However, in other circumstances, the cash rebate option might work better, depending on the rebate amount, the interest rate, and the loan term.
Ultimately, the cash rebate will reduce the amount of interest you pay, as well as how much you pay in taxes on the total amount financed.
Are Interest Charges Just Baked Into The Sale Price Of 0% Financing Deals?
It’s a fair question, and the honest answer is: sometimes, indirectly. The 0% financing itself is genuinely interest-free, since the manufacturer’s financing arm absorbs the interest cost. However, there are a few ways that cost can quietly show up elsewhere:
- Forgone rebates or discounts: Dealers often make you choose between 0% financing and a cash rebate or other incentive. If you give up a $3,000 rebate to get 0%, that rebate is effectively the price you paid for the interest-free loan.
- Less room to negotiate: When you take a subsidized 0% offer, the dealer may be less willing to discount the vehicle’s price, since their margin is already reduced.
- Inflated sticker prices: In some cases, a dealer may quote a higher price on a 0%-financed vehicle than you’d find on a comparable one elsewhere.
To protect yourself, negotiate the vehicle’s cash price first, before you discuss financing, so you know the true price. Then compare the total cost of the 0% deal, including any rebate you’d be giving up, against paying cash or financing at a normal rate with the rebate. If the numbers still favour 0%, it’s a genuine saving.
Where Can You Get 0% Financing On Cars In Canada?
A 0% car loan is only offered by dealerships, and usually not with banks and other lenders. Generally, car dealerships offer 0% car financing as a way to sell more vehicles and make room for new inventory. This is why dealerships are one of the only places that offer this type of financing.
Banks and credit unions have nothing to gain from such financing, which is why they don’t typically offer it. They have no inventory to sell, and therefore no benefits to gain from offering loans with zero interest. Lenders make money from the interest they charge on loans, so unless the lender is associated with the car manufacturers themselves, they’re not likely to offer such a deal.
Because these promotions change frequently and vary by brand and model, it’s worth checking the current offers before you start shopping.
When Do 0% Financing Offers Usually Appear?
0% financing deals aren’t offered year-round. Manufacturers and dealerships tend to roll them out when they have the most incentive to move inventory, including:
- Model-year changeovers: Late summer through fall, when the new model year arrives and dealers want to clear out the outgoing year’s vehicles.
- End of the year: December often brings holiday sales events and year-end sales targets that dealers are pushing to hit.
- Slow sales periods: When demand dips, a 0% offer can help spark sales.
- On specific, overstocked models: Rather than the whole lineup, 0% is usually tied to the models a manufacturer most wants to sell.
Do All Car Brands Offer 0% Financing?
No. Not every brand offers 0% financing, and those that do don’t offer it on every model or at all times. It’s most common on mainstream and domestic brands with larger inventories to move, while some luxury and high-demand brands rarely advertise a true 0% rate, sticking to low promotional rates, lease deals, or cash incentives instead. Availability also shifts month to month, so a brand offering 0% today may not be next month.
Can You Get 0% Car Financing For A Used Car?
In almost all cases, no. 0% financing is a manufacturer-backed promotion designed to sell new vehicles, so it’s tied to new cars, not used ones. Because a used car has already been sold once and the manufacturer isn’t subsidizing the sale, there’s no 0% incentive to offer.
If you’re buying used, you likely won’t find 0%, but you can still get a competitive rate by:
- Building your credit before you apply, so you qualify for the lowest rate available.
- Shopping around with multiple lenders and dealerships, including credit unions.
- Considering a certified pre-owned (CPO) vehicle, which sometimes comes with better manufacturer financing rates than a regular used car, though still rarely 0%.
On the rare occasion a lender advertises 0% on a used car, read the fine print carefully and confirm the vehicle isn’t overpriced to make up for the lost interest.
Other Types Of Car Financing Offers
0% financing isn’t the only incentive automakers offer. Even if you don’t qualify for a 0% rate, you may be eligible for other discounts and rewards that lower your cost. Using Nissan Canada as an example, common programs include:
- Student and grad discounts: Available through Nissan Canada Finance, the Nissan Student and Grad Program can make getting a new vehicle more feasible. On top of current special offers, you may qualify for up to $1,500 in rewards on select Nissan models.
- Newcomer and temporary resident offers: The Nissan Temporary Resident Guidelines offer flexible finance and lease terms to help you settle into your new journey. Your local Nissan dealer can help you apply for credit and find a car you love.
- Loyalty offers: Already a Nissan driver? The Nissan Loyalty Program is the automaker’s way of thanking returning customers with loyalty dollars you can apply to your next Nissan vehicle.
Many other brands run similar student, newcomer, and loyalty programs, so it’s worth asking your dealer what you qualify for and whether any of these can be combined with a financing rate.
Example: Nissan Models And Loyalty Rebates
| Model Year | Model | Dollars | Rate Reduction |
|---|---|---|---|
| 2026 | ARIYA | $500 | – |
| 2026 | ARMADA | $500 | – |
| 2026 | FRONTIER | $500 | – |
| 2026 | KICKS | – | 0.5% |
| 2026 | LEAF | $500 | – |
| 2027 | MURANO | $500 | – |
| 2026 | MURANO | $500 | – |
| 2026 | PATHFINDER | $500 | – |
| 2026 | ROGUE | – | 0.5% |
| 2026 | SENTRA | – | 0.5% |
| 2027 | Z | $500 | – |
| 2026 | Z | $500 | – |
These loyalty rewards are an example from Nissan Canada and are subject to change. Always confirm current programs and amounts with the manufacturer or your local dealer.
Learn more: Nissan.ca
How To Qualify For 0% Financing On A Car?
Even if you can find a dealer that offers 0% car financing, getting approved for such a program might not be so simple. As mentioned, dealerships typically only reserve 0% car financing for consumers with excellent credit. To qualify for this type of financing, you’ll need to meet strict loan criteria. To qualify for 0% financing on a car purchase, consider the following:
Check Your Credit Score
To see if you’d be eligible for 0% car financing, you’ll want to first check your credit score. You can do this for free with the credit bureaus or with several online third-party resources, like CompareHub from Loans Canada.
Shop Around
Comparison shop with different dealerships to see how the ticket prices for the car you want vary. You could potentially save a great deal of money by taking some time to see what different dealers offer for the same vehicle. You should also shop around with different lenders to see what types of car loan offers are available and see if any offer 0% financing.
Get Pre-Approved
When you’re ready to visit a dealership, you’ll want to bring along your pre-approval letter to give you more bargaining power with the car dealer. If you can show that you’re creditworthy, you may stand a better chance of securing 0% financing, or at least a low rate.
Negotiate
Haggle with your car dealer to get the best possible deal on your car loan. If you can’t get the rate down low enough for your comfort level, there are other options available, such as looking into how to lower your car loan interest rate.
Advantages And Disadvantages Of 0% Car Financing In Canada
There are several perks that come with 0% car financing in Canada, but there are also some drawbacks to weigh before you commit.
Advantages
- 0% interest: You won’t have to pay interest, so you’re essentially able to borrow money for free, which can save you thousands over the life of the loan.
- Faster repayment: With no interest on the loan, you can pay off your debt in a shorter period of time and be loan-free sooner.
- Upgrade your car: The money you save on interest can go toward a more expensive vehicle or extra features, like heated seats or a leather interior.
Disadvantages
- Only available from car dealers: Banks and other lenders don’t offer 0% financing; you’ll only find these deals at car dealerships.
- More restrictions: Dealers may only offer 0% financing on vehicles they’re trying to move, and you may face limits on the loan term.
- Strict eligibility requirements: Only consumers with excellent credit can get approved. With poor credit, you’ll have a tough time qualifying.
- Higher monthly payments: Because the terms are shorter, your monthly payments may be high and harder to fit within your budget.
- Limited to part of your loan term: The 0% rate may only apply to a portion of the loan amount or for a limited period, so read the fine print.
- Not available on used cars: 0% is typically a promotional offer on new vehicles, so you likely won’t find it on a used car.
If your credit isn’t strong enough to qualify for 0%, you still have options. A car loan from an alternative lender can help you finance a vehicle while you work on improving your credit.
Things To Watch Out For With 0% Car Financing
A 0% car financing deal may sound enticing, but be sure to watch out for the following red flags:
Red Flags To Watch Out For
Guaranteed approval: Lenders who promise approval for 0% car financing without reviewing your financial profile or checking your credit should be avoided. Legitimate lenders will at least review your financial and credit profile before approving a loan.
Sky-high prices: Look out for dealers offering 0% financing on vehicles priced much higher than others in the area. They may be trying to make a quick profit by charging you more than the fair market value.
Short promotional periods: Watch out for zero-interest deals that are only good for a short introductory period. Once that time frame expires, you could be stuck paying a very high interest rate partway through the loan term.
Tips On Securing The Best Car Financing Deals
To get a good deal on car financing, consider the following tips:
- Boost Your Credit Score: One of the main requirements for 0% interest and other financing options on a car loan is having good to excellent credit. Taking some time to improve it is one of the best ways to help you qualify for a great car financing deal, and to land a good interest rate on a car loan.
- Get Pre-Approved: Getting pre-approved for a car loan will give you a clear idea of what you can afford. It can also improve your odds of securing a great loan product that fits comfortably within your budget. Plus, a pre-approval letter will save you plenty of time and hassle by helping you focus only on vehicles you can afford.
- Buy Used: Buying a used vehicle instead of a new one can help you save a few hundred to a few thousand dollars, depending on the car model, market demand, and condition. Many dealerships offer great prices and financing options on their used models, and these cars are typically serviced and certified, which is not always the case when buying from a private seller.
- Car Seasons: Dealers often advertise deals and promotions at specific times of the year. For example, it’s common to see discounts near the end of the year, at the beginning of summer, or during the off-season for certain types of vehicles, such as convertibles and sports cars.
Final Thoughts
If you can get a 0% car financing deal, it may be worth seriously considering, as long as you read the fine print and make sure you’re not overpaying for the vehicle. If everything checks out, you can essentially borrow a few thousand dollars for free to buy your next car.
0% Car Financing FAQs
Generally speaking, bad credit will not qualify for 0% financing. Most lenders that offer 0% car financing require borrowers to have a credit score of at least 700 or higher.
0% financing is usually offered through a manufacturer’s own financing arm, which subsidizes the interest rate to help sell more vehicles. The automaker absorbs the interest cost as a promotional incentive, which is why regular banks rarely offer it and why it’s typically limited to new models and buyers with excellent credit.
Zero percent financing is not always available. Dealers in Ontario may offer 0% rates when they have inventory to move and are trying to clear space for the upcoming year’s models. You’ll need to check regularly to see what dealers are offering at any given time.
The down payment amount required depends on the lender. A higher down payment is usually best, as it shows the lender that you have the financial backing to support monthly loan payments. Plus, it will reduce the overall loan amount you need to take out.
A handful of manufacturers run 0% financing at any given time, but the list changes frequently as promotions start and expire. Since offers rotate month to month, it’s best to check the current deals by brand before you shop.
Usually no. Used cars almost never come with 0% financing offers. If a lender does offer a 0% car loan for a used vehicle, review the fine print to make sure there are no extra fees. Also, check that the vehicle isn’t priced higher than it should be to make up for no interest.
Yes, 0% financing is usually only offered on new vehicles, and typically only if you have excellent credit.
References
- Bank of Canada. (2026). Interest rates for new and existing lending by chartered banks. Bank of Canada.
