Can I finance a car without interest?

Roman Danaev28 November 2025

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You can finance a car without interest, but only when the conditions line up. Interest-free car finance exists mainly for new cars because the 0% APR product depends on support from the vehicle manufacturer. If the manufacturer chooses not to subsidise the interest, the offer disappears. Manufacturers offer these 0% APR promotions to stimulate sales of specific new-car models, which is why the deals appear only on selected vehicles and often for a limited time.

The lender still carries financial risk even when APR is 0%, so approval relies heavily on a strong credit score and a positive affordability check. Guides consistently note that 0% car finance is usually reserved for customers with good or excellent credit. Meanwhile, the monthly repayments in a 0% arrangement reduce only the outstanding balance, because no interest is added.

Used cars work differently. Dealers usually cannot absorb the lost interest on second-hand stock, so used vehicles are typically financed with standard-interest products through a lender, while a finance broker helps you compare options and secure competitive rates when 0% APR is not on the table.

What does interest-free car finance mean?

Interest-free car finance means you repay the amount you borrow without any interest charge on top. In other words, the APR is set at 0%, so there is no extra interest cost added to the finance agreement. Manufacturers often use 0% APR finance as a marketing tool, funding the missing interest to encourage buyers into specific new models.

Many people hear “0% APR” and assume there is no cost at all. In reality, you still pay the car’s cash price, your deposit and any extras you choose, such as service plans or accessories. Some deals may also include fees or a higher list price to offset the lack of interest, so the total amount payable can end up similar to, or slightly higher than, the best discounted cash price.

By contrast, standard-interest car finance includes interest in the total amount repaid. That interest is calculated from the interest rate and APR agreed with the lender, which makes the overall cost structure noticeably different from an interest-free deal.

How interest-free deals differ from standard car finance

Interest-free car finance and standard-interest car finance share the same basic framework: a deposit, a term and monthly repayments. The major difference lies in how they calculate the total cost. In a standard-interest agreement, the lender’s interest rate feeds into APR and becomes part of the total amount payable. Each monthly repayment covers both some of the capital and some of the interest due over the term.

Interest-free finance removes that interest element. With APR at 0%, each monthly repayment reduces only the outstanding balance, without any extra interest added. For these offers to work, the manufacturer (or occasionally a specialist retailer) absorbs the interest cost, which is why they are tied to selected new-car models and time-limited promotions.

The payment structure emphasises the contrast. Standard-interest products spread both capital and interest across the term, often allowing lower deposits and longer durations. Interest-free deals instead spread only the capital, so they commonly come with higher deposits or shorter terms to manage the lender’s risk, even though the headline APR is 0%.

How 0% car finance works in the UK

0% car finance in the UK follows the same legal and regulatory framework as any other regulated motor finance agreement. It is still a consumer credit product, overseen by the Financial Conduct Authority, and lenders must meet the same rules on creditworthiness and affordability. The difference sits in the commercial structure: the APR is set at 0%, and the manufacturer or finance provider funds the missing interest as part of a promotional strategy on selected new cars.

When you apply, the lender assesses your credit score, income and outgoings to check whether the repayments are affordable, exactly as they would for a standard-interest product. Soft-search eligibility tools and affordability checks are common, and they must not be skipped just because APR is 0%.

Monthly repayments under a typical manufacturer-backed 0% deal are straightforward: they reduce the outstanding balance, and in many cases the total amount payable broadly matches the car’s cash price plus any extras and fees agreed in the contract. However, some offers use higher list prices or added fees to recover part of the cost of the promotion, so it is important to compare the total amount payable, not just the APR.

Deposit requirements for 0% deals are often higher, and promotional terms are shorter, reflecting the fact that lenders receive no interest income over the life of the agreement.

Who is eligible for 0% car finance?

Eligibility for 0% car finance is generally tighter than for standard-interest deals. Expert guides agree that these offers are usually reserved for borrowers with good or excellent credit scores, because the lender is not compensated by interest if something goes wrong. Lenders also apply affordability assessments to make sure the repayments fit comfortably within your budget.

Manufacturers and their finance partners typically restrict 0% APR deals to particular new-car models, trims or stock vehicles they want to move quickly. This limited vehicle selection is a common trade-off: you may not find the exact car or specification you had in mind included in the promotion.

Larger deposits are also common on 0% deals, because higher upfront contributions reduce risk for the lender and manufacturer. Combined with shorter terms and strict criteria, this makes interest-free car finance a selective option rather than an everyday product. For most used-car buyers, competitive standard-interest finance arranged directly or through a broker remains the more realistic route. Brokers work with multiple lenders and arrange used-car finance on behalf of customers, providing access to a wider range of options than a single dealer can offer.

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