Usually many feel that when companies offer 0% interest rate over car financing are carrying on a scam. The question arises that a 0% rate means that the bank or the company ends up making no profit. Since no interest rate will be paid over the term of the whole loan, the company will not end up benefiting. Without a benefit, the whole idea seems like a scam?
When talking about car loans you need to remember that you have to pay an interest rate whenever you choose to get a car loan or car finance. You end up borrowing the money from the bank and have to return it with interest. When you get 0 car finance, you get the money from the bank or the company with no interest rate return. It is the same as buying a car, but your payments are spread over a long term.
Now, what is the actual incentive of the bank to lend you money for 0 car finance? The answer is simple; the bank does not lend you the money itself. In fact, it is the automaker that lends the money. When an automaker lends for a car loan, it does not face any loss. Since they are getting the actual full price of the car in return, they are still unharmed by the 0 car finance offer. It is only that the money being paid by you is spread over a longer period. So to answer the question, 0% car loan is not a scam.
Even though offers for 0 car finance are quite common across the UK, not many end up qualifying for it. It will only be provided to car buyers who have a perfect or near perfect credit history. You need absolute high credit scores and a long credit history to qualify for this offer.
So even though the idea of a 0 car finance seems highly attractive, it is quite difficult to get it. Always check with your car dealer and automaker before opting for this offer. Check for other offers available by the bank or your car dealer as well.