This is how to get a car without down payment

You desperately need to buy a car, but you do not have the cash or the required down payment. No problem, the car dealer said: You can finance the entire purchase-interest rates as high as 12% to 22%. Unless you like paying such expensive terms, consider these ways to buy a car without a down payment.

Key points

  • If you need to fully fund your car purchase, improving your credit score can make you eligible for better loan terms.
  • Obtaining a co-signer may also allow you to purchase a car with a down payment.
  • Be sure to shop around between dealers and lenders; the more you know about car loan interest rates and terms, the better deals you can negotiate.
  • Even a small down payment is better than nothing-so if possible, postpone buying a car until you can come up with some cash.

Improve your credit score

For borrowers who have a stable job or a fixed monthly income, have lived in a place for at least one year, and have a credit history showing that they can pay the repayment, the lender will lower the interest rate.

A credit score of 680 or higher gives you the best opportunity to persuade the lender to waive the down payment without raising interest rates. A score between 580 and 669 is considered a subprime mortgage; the lender may waive the down payment, but will certainly provide you with the entire car loan at a higher interest rate. A score of 580 and below may cause the lender to reject you altogether.

Your first step is to straighten out your credit report by checking its accuracy. Then, take steps to improve your credit score. Pay all bills on time and try to pay off debts and credit card balances-or at least keep them low, about 25%-30% of the total credit limit. Since having a good credit score is essential to getting an ideal loan, you may want to consider one of the best credit monitoring services to ensure the safety of your information.

Consider a Cosigner

Another option is to have a family member or friend with a higher credit score sign the purchase contract with you. It may exempt you from the down payment, although it will only help you lower interest because the lender realizes that the car is usually for people with lower scores and usually offers annual interest rates (APR) that hover around the median. Scope.

Obtaining a cosigner is not easy. This person shares the responsibility for the loan with you: if you miss the payment or are habitually late, the credit scores of you and the guarantor will also be lowered. It can also be emotional-although the client technically has no ownership of the vehicle, they will feel that they have the right to own it. If you do get a client, please share the title; be diligent in repayment and keep organized records to prevent disagreements.

Shop around

Car loans can vary greatly. So do your homework and shop around. Consider car dealers, local credit unions, banks, or alternative loan providers. Research the current car loan interest rates online, and look for professional online lenders that provide low-interest car loans with no down payment requirements.

Before asking around, familiarize yourself with the most common car loan interest rates, so as not to be deceived or misled by dealers. They are essentially a group of competitive people, and if you show that you know what the current rates are and what others offer (implying that you will take your business elsewhere), it’s surprising that the people you deal with Suddenly “see what we can do for you.”

Save money for down payment

Yes, we know that the title of this article is How to get a car without a down paymentBut if we don’t say: if you can take out some cash, you will really do better. The problem with not paying a down payment is that if you want to sell a car on the road, it can put you in a reverse position. The car depreciated quickly. If the outstanding balance of the loan exceeds the resale value of the car, you may end up paying heavily out of your pocket, even if you owe a lot of money.

And the bite may not be as bad as you think. Although 20% is the traditional amount, dealers have recently become more flexible in terms of the minimum cash amount they require. In fact, due to the increase in vehicle costs, car buyers paid an 11.7% down payment on average in 2019.Of course, the more cash, the better. But it is recommended that you make a down payment of any amount because it will reduce the amount of principal and interest you owe and avoid the above-mentioned “underwater” situation.


According to Kelly’s Blue Book, the range of down payment required for new or used cars.

If you can, wait a few months before buying a car so you can save for the down payment. While saving, use this time to improve your credit score so that you can qualify for more favorable loan terms.

Bottom line

You can buy a car without a down payment, but you are at a higher risk of being labelled with a higher interest rate. If you own a car in good condition, you can always buy a cheaper used car or trade with an existing car, as these steps will usually also lower your rates. In all cases, look for short-term loans with a maturity of less than 72 to 84 months and avoid additional guarantees, such as extended warranty periods or credit life insurance, which may increase your total payment.

To better understand what it might be like to buy a car without a down payment, it is worth trying a car loan calculator to make sure that other factors are still favorable.


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