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Zero-percent loans on 11 models unusual for Toyota

NEW YORK — Toyota Motor Corp.'s unprecedented offer of zero-percent financing on nearly a dozen models is trying to make the point that tight credit is no excuse for buyers — in fact, the company is literally giving credit away.

But after the top Japanese automaker posted a 32 percent drop in September sales that only domestic competitors had experienced until now, the question is: Is it enough to get people to buy?

"I don't think it's going to just open the floodgates," said Jessica Caldwell, an analyst at the auto Web site Edmunds.com. "But it's going to help a lot of people who want a quality car, who don't want to worry about it, and are now going to be able to afford it because of this deal."

Toyota's U.S. division said Thursday night it will offer the free financing on 11 models with terms ranging from 36 to 60 months. The incentive expires Nov. 3.

Included in the deal are the Matrix, Corolla, Camry, RAV 4, Highlander, FJ Cruiser, 4Runner, Sequoia, Sienna, Tacoma and Tundra. The automaker's hybrids, along with some better-selling models such as the Yaris subcompact, are excluded.

Although Toyota has cut financing rates and offered other deals in the past, zero-percent financing on such a wide scale is an unprecedented move for an automaker that has prided itself on its restraint with incentives. Its U.S. counterparts, meanwhile, have aggressively used cut-rate financing and big cash-back offers as a way to bolster sales in the flagging auto market.

Nearly all automakers said tighter credit standards knocked buyers from the market last month, when sales industrywide fell 27 percent from a year earlier, hitting less than 1 million for the first time in 15 years.

"What this is a response to is the misconception that getting a loan or leasing a car is difficult to do," Toyota spokesman Xavier Dominicis said Friday. "At Toyota, it's not. Our finance arm ... it's in a position to loan money."

Richard Howse, senior director of auto finance for J.D. Power and Associates, said Toyota's offer is probably an attempt to kick-start its sales, considering September's disappointing results. "I don't want to read their minds, but I think they realize they need to move the cars they have now," Howse said.

Kerry Rivera, spokeswoman for Toyota's finance arm, Toyota Financial Services, said the requirements to qualify for the offer include a FICO credit score of at least 650. The median FICO score is 720 on the scale that ranges from 300 to 850, according to a spokesman for Fair Isaac Corp.

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