Our favorite discount is now available on scores of new cars and trucks.

That's 0% financing.

If a finance company is willing to lend you $20,000, $30,000 or more for free, we say, grab it.

Here's why.

If you finance $25,000 for four years at 0%, you'll pay $521 per month or a total of $25,000.

That same $25,000 financed at 7% -- the current average cost for a 4-year new car loan -- will cost $599 per month or a total of $28,746.

Your monthly payments will be $78 lower and you'll save $3,746 in interest charges over the four-year life of the loan.

If you borrowed $15,000 for four years, you would save $2,247 with 0% financing.

Even if you were going to pay cash, it makes sense to take advantage of that no-cost money instead. You would use the lender's $25,000 for free while earning interest on your $25,000 through savings or investment.

If all you did was put that $25,000 into a CD compounding interest annually at a 3% rate, it would earn $3,138 during the 48-month car loan period.

It's like finding money in the street.

Automakers will often give you a choice between a discount loan or cash rebate that can be used to reduce the purchase price of the car or truck.

A 0% loan will trump all but the most humongous rebates.

Chevrolet, for example, has been offering up to $3,500 cash back or financing for as little as 0% on 2009 Silverado 1500 pickup trucks.

According to Edmunds.com, the average sale price of the Silverado Extended Cab 1500 LT is $28,632.

A 20% down payment of $5,726 would leave a balance to be financed of $22,905. Even with the hefty $3,500 rebate deducted from the loan balance, you would still save about $450 over the life of the 48-month loan if you chose 0% percent financing.

You don't have to guess about this.

Our "Rebate vs. low-cost loan calculator" will tell you exactly which discount saves the most.

The decision is more likely to go the other way when you're offered discount financing that's not as generous as 0% and you're buying a less expensive car or truck.

Pontiac, for example, is offering $2,500 cash back or a 5.9% discounted finance rate on the 2010 Vibe compact wagon. Edmunds.com reports the average transaction price for the Base Vibe with 2.4-liter engine is $17,202.

If you chose the discounted rate, after making a 20% down payment you would be financing approximately $13,762 at 5.9%. This would cost you $15,483 over 48 months.

If you took the $2,500 rebate instead and added that to your 20% down payment, the balance on same Vibe would be $11,262. Finance that at an average interest rate of 7% and your total cost would be $12,670 over 48 months.

Here, the advantage clearly lies with taking the rebate.

The only hurdle to obtaining a discount loan is qualifying for one.

There are no hard-and-fast rules for how high your credit score must be to be approved for a 0%, or 2.9% or 5.9% loan.

But if you have a below average credit score (that's about 720 right now) don't be shocked if you're turned down.

Discount loans are only available through the financing companies owned by, or affiliated with, the manufacturer offering the deal -- GMAC for General Motors and Chrysler brands, Ford Motor Credit for Ford brands, Toyota Financial Services for Toyota brands, and so forth.

While they're more likely to lend to buyers with below-average credit than a commercial bank, those loans usually come with higher than average interest rates.

As Honda constantly repeats in all of its ads for discount financing, it's only available "For well-qualified buyers."

Use our extensive database of auto loan rates to compare deals from dozens of banks and finance companies.

By Russ Heaps

Interest.com Contributing Editor