What 0% interest means
The amount financed is divided by the number of payments. With no interest and no fee, the total repaid equals the amount borrowed and the APR is 0%.
An arrangement fee changes that. It is deducted from the money you actually receive, so the effective APR rises above zero even though the quoted rate is 0%.
Worked example
Borrowing £18,000 over 48 months at 0% gives 48 payments of £375 and a total repayable of £18,000.
Against a normal car loan at 8%, the interest saved is £2,979.73. That is the value of the offer before any fee or price conditions.
The conditions behind 0%
0% deals often require a deposit, a shorter maximum term or a particular model, and they may not be combined with a discount. Check the total price, not just the rate.
If a fee applies, enter it to see the real APR. A £500 fee on a £18,000 loan is a meaningful cost even at 0%.
Inputs for the 0 interest car loan calculator
Amount borrowed
The amount financed after any deposit.
Term
The number of monthly payments.
Upfront fee
Any arrangement fee you pay to get the 0% deal. Enter 0 if there is none.
Compare with a loan at
The APR you would otherwise pay, used to work out the saving.
CALCULATOR QUESTIONS
Car loan calculator 0 interest questions
Is 0% interest really free?
Only without a fee and only if you would have bought the car at that price anyway.
How much does 0% save on £18,000 over 48 months?
About £2,979.73 compared with an 8% car loan.
Does a fee change the APR?
Yes. A fee reduces the money you receive, so the effective APR rises above 0%.
Can I settle a 0% loan early?
Usually yes. There is little interest to rebate, so check whether a settlement charge applies.