How Car Buyers Can Land the Elusive 0% APR

ALL OF THOSE advertisements touting 0% and low APR financing and thousands of dollars in cash back are enough to pique any prospective car buyer's interest. But, as many consumers have rudely discovered, that's all they may be good for.

Hoping to lure car shoppers back onto their lots, struggling auto makers are offering all types of great-sounding financing deals and discounts. For a car buyer to actually take advantage of these deals, however, is another matter. Even if you're convinced that your standup credit score means you'll be a shoo-in for the 0% financing advertised on that brand new BMW 135i Convertible, think again. Not only are 0% deals incredibly limited, but they're also extremely hard to qualify for and may even require a significant down payment.

"The point of [the 0% APR deals] is to get people into the dealership and to get them all excited about the car until they realize they don't qualify and have to settle for a higher APR," says Jonathan Wahl, a spokesperson for auto information web site Edmunds.com.

Currently, six major auto makers — including Chrysler, General Motors (GM) and Mazda — offer 0% financing, according to Edmunds.com. Most of the models that qualify, however, are gas-guzzling trucks and SUVs that dealers desperately want to clear from their lots. Try to find 0% deals on more popular European luxury models or Japanese compact cars and it will be an exercise in futility. "You won't find a single fuel-efficient vehicle [with 0% APR] unless it's struggling in terms of sales," says Wahl.

Even if you covet the behemoth Dodge Nitro (marketed with an offer of a 0% APR through the end of July), attaining that spectacular financing will be far from a cakewalk. Potential buyers not only need to boast a credit score of 680 or higher to qualify, but they'll also have to cough up a steep down payment of at least 10%.

While the prospect of landing the elusive 0% or a low APR may seem challenging, it's not impossible. Here's what you need to know before stepping onto the dealer's lot.

To qualify for the coveted 0% APR, you'll need a score of at least 680 and, in some cases, 700, says Terry Jackson, an automotive writer with Bankrate.com. Expect to be quoted higher rates the further your score drops below 680. For example, a credit score of 600, will probably result in an 8% rate, says Jackson. Fall below 600 and you can end up with a whopping 20% to 22% APR. At this point, it's best to hold off on buying a car so you can improve your credit score first. (Also see our tips on how to boost your credit score.)

As mentioned earlier, even if your credit score passes muster, you'll still need to afford a down payment of at least 10% in order to lock in that magical 0% rate. If your score is below 680, then forking over a 20% down payment can increase your chances of getting 0% APR, says Jesse Toprak, executive director of industry analysis at Edmunds.com.