The simple answer is: Yes, 0% APR car loans are good deals. When you pay no finance charges (interest) on a loan, you save a significant amount of money over the term of your loan — and you reduce the amount of your monthly car payment.

How much do you save with a zero percent loan?

Here’s an example:

Let’s say you buy a new car for $24,000 and you want a 60 month loan. If you were to get an auto loan at a conventional interest rate of 6.5%, your payments would be $470 a month and your total finance charges would be $4175.

If you bought the same car with a 0% APR loan, you would save the $4175 in finance charges and your monthly payments would only be $400 a month, a savings of $70 a month.

Getting a 0% APR loan sounds like a good deal — and it is — but what if the car dealer/manufacturer is also offering a rebate, which is typically offered as an alternative to the 0% loan. You must select one or the other, but not both. Which is better?

As this is being written, this year, 2010, has become the best time to buy a new car in years.

In normal years, we would tell you that the best time to buy a car is when sales are slow at the end of the month, end or the year, or during vacation season. We would tell you that you might still have to negotiate your prices because dealers aren’t just going to give you a good deal because they like you.

BUT……..things are much different now. Sales have been slow for over a year and are still slow right now. As a result, we are now seeing some of the biggest and best car incentives on new cars that we’ve seen in years. Nearly every car manufacturer is now offering a combination of large factory-to-customer rebates, low-interest loan deals, 0% APR loans (even on long 72 month loans), special lease deals, free maintenance, and “secret” factory-to-dealer rebates that dealers usually give to customers.

Why has 2010 become such a good time to buy a car?