IT WASN'T SO LONG
ago that auto-industry experts were predicting the death of those juicy 0% APR offers. They figured that as interest rates rose, manufacturers would be less willing to absorb the cost of interest-free car loans.
Turns out, those predictions were premature. These days, domestic and Japanese manufacturers alike are touting the return of the zero-percent deals. Ford Motor, for example, is offering 0% financing on most of its Ford models through May 1. Other manufacturers promoting 0% offers include Mitsubishi, Suzuki, Mazda, Hyundai and Toyota Motor. (European manufacturers never embraced the 0% deals and continue to avoid them.)
Is 0% financing right for you? Crunch the numbers in our "
Why is 0% back? Because it works, says Mike Chung, an industry analyst at Edmunds.com. "It's attractive to manufacturers in the sense that it doesn't hurt the brand as much as a cash incentive would," he says. So even though it costs manufacturers more than offering cash back, 0% financing is the better way to move cars off lots.
In fact, today's 0% deals are arguably better than those we saw a few years ago in part because auto loan rates are higher. Three years ago, the average 60-month new-car loan rate was around 5.5%, according to Bankrate.com. These days, the average rate on the same loan would be 6.65%.
Another potential perk this time around is that the 0% financing is being offered on longer-term loans, says Jack Nerad, editorial director at the Kelley Blue Book. Several models, such as the 2005 Mitsubishi Eclipse and the 2006 Ford Expedition, for example, can be had at 0% APR for as long as 60 or 72 months, respectively. In previous years, 0% APR promotions were mostly limited to 24- and 36-month loans, he says.
Granted, not as many auto makers are offering 0% deals compared with the past several years, and of those that are, many aren't offering them on as many models. Today's promotions are mostly limited to cars that are more difficult to sell: Jeeps, gas-gulping SUVs, four-wheel-drive vehicles and other cars that are out of favor, according to Chung.
These are the latest 0% APR deals, according to Edmunds.com:
|2005 Ford Escape, Mustang, Econoline Cargo/ Wagon, F-250/350 Super Duty||36 months||National||May 1, 2006|
|2005 Ford Freestyle||36, 48 or 60 months||National||May 1, 2006|
|2006 Ford F-150, Focus, Fusion, Ranger, Explorer, Freestar, Freestyle, Five Hundred, F-250/350 Super Duty||36 months||Select markets||May 1, 2006|
|2006 Ford Escape, Crown Victoria, Econoline Cargo/ Wagon, Escape Hybrid||36 months||National||May 1, 2006|
|2006 Ford Expedition||36, 48, 60 or 72 months||Select markets||May 1, 2006|
|2007 Ford Explorer Sport Trac||36 months||Select markets||May 1, 2006|
|2006 Mercury Milan, Montego, Monterey, Grand Marquis||36 months||Select markets||May 1 or July 5, 2006 (check your local market for details)|
|2006 Mercury Mariner, Mariner Hybrid, Mountaineer||36 months||National||July 5, 2006|
|2005 Mazda RX-8||36 months||National||May 1, 2006|
|2005 Suzuki Reno, XL-7, Aerio, Verona, Forenza, Grand Vitara||24 or 36 months||National||May 1, 2006|
|2006 Suzuki Reno, XL-7, Aerio, Verona, Forenza, Grand Vitara||24 months||National||May 1, 2006|
|2005 or 2006 Toyota Sienna, 4Runner, Highlander||24 months||Southeast||May 1, 2006|
|2005 or 2006 Toyota Tundra||36 months||Southeast||May 1, 2006|
|2006 Toyota Corolla, Highlander Hybrid||24 months||Southeast||May 1, 2006|
|2005 Hyundai XG350||24, 48 or 60 months||South Central||May 1, 2006|
|2005 Lincoln LS, Aviator||36 months||National||July 5, 2006|
|2006 Lincoln Navigator, LS||36, 48 or 60 months||Select markets||July 5, 2006|
|2006 Lincoln Mark LT||36 months||National||July 5, 2006|
|2006 Lincoln Town Car||36 months||Select markets||July 5, 2006|
|2005 Mitsubishi Endeavor, Eclipse Spyder||48 or 60 months||National||June 30, 2006|
|2006 Mitsubishi Galant, Endeavor||48 or 60 months||National||June 30, 2006|