0% deals virtually gone for car loans

By Chris Woodyard
USA Today

LOS ANGELES — Zero-percent auto loans are increasingly holding zero-percent appeal for automakers wrestling with higher interest rates and pushing to better target incentives to lure car buyers.

Over the past couple of years, automakers flooded the airwaves with ads proclaiming 0 percent financing on some of their best-known brands.

Today, those 0 percent deals are harder to find — and they usually cover only shorter-term loans.

Auto Web site CarsDirect.com surveyed eight popular models from General Motors, Ford Motor and DaimlerChrysler that last year all offered 0 percent financing over the typical five-year loan period.

Last week, the best interest rates offered by manufacturers for five-year loans in the Los Angeles, Orlando, Fla., and New York markets checked were mostly 2.9 percent to 3.9 percent. To get 0 percent, a buyer would have to opt for a 36-month loan.

There were some exceptions: Dodge was offering 0 percent financing on its minivans, Ram 1500 Quad Cab pickup and Jeep Liberty for a full 60-month term.

But in other cases, 0 percent deals have dried up. A Ford Expedition buyer can still opt for $3,000 cash incentives — same as last year — but the best financing is no longer 0 percent over 60 months. It's 1.9 percent for 36 months.

For the most part, "Zero percent is all gone," Ford spokesman Dave Reuter says. "We have so much new product out there, we don't feel the need to offer 0 percent."

Toyota, which had been offering 0 percent financing deals on its Tundra pickup, has jettisoned the goose egg as well.

Higher interest rates are partly to blame.

But manufacturers aren't as quick to throw 0 percent financing deals at buyers because they are taking more care to pinpoint incentives, says George Peterson of auto consulting group Auto-Pacific.