If you have ever wondered, “Can I get a car with no down payment?” the answer is, “Yes.” Though there are benefits of placing down payment, it is possible to get a car without one. In a perfect world, a 20% down payment on a new car offers a degree of lender confidence. Also, even if your credit score is low, in general, with a down payment, your monthly car payments will be lower.
However, in the real world, not all circumstances favor saving several thousand dollars for a new car. It may be that your old car is back in the shop for the third time since July. Repair costs are sucking the money you have saved for a down payment. At what point do you decide that you simply cannot put off a car purchase? Even with no money down?
For the majority of us, a car is a necessary part of life. A reliable one is imperative. Simply because you don’t have the recommended down payment in hand, doesn’t mean you cannot get or should not apply for a car loan. The truth is that you can and should. There are ways to get around the car down payment. Depending on the circumstances, the key is finding a car that will fit into your budget and, if necessary, support from a relative or friend. You should also work with a reputable dealership with experience selling cars to those without a down payment. Here are 3 things consideration if you decide to get a car with no payment:
Buy a Quality Used Car
Finding a car that fits into your budget means buying used instead of new. Buying used over new is the way to go for many reasons. Number one is not tying up a sizeable chunk of your monthly income on a car payment. You can purchase a reliable, quality used car—even an older make or model of the car you were considering purchasing new—for thousands of dollars less.
Because it’s a used car, the insurance will be less, registration fees will be lower, and depreciation is minimized. Chances are, its value will hold longer than a brand new car because the depreciation is far less than if you drove a new one off the lot. In buying used without a down payment, the monthly payments for the used car should only be marginally higher than the monthly payment with a $1,000 down.
For example, you have found a quality used car for $8,000. If you take a 5-year loan of $8,000 with an 11.38% APR—the current national average with a fair credit score (601 to 660)—the monthly payment on the loan is $175.46. With a $1,000 down, it would be $153.55, which is a $21.91 a month difference. Whatever you decide, down payment or not, be sure that the monthly payments for the loan (and the interest rate) will fit into your budget.
Finding a Down Payment
Still, if you wish to save that near $22 a month (or some of it), you can use your old car is a down payment. If you have a car, no matter the shape it’s in, then there may be room for negotiation with the dealership, or you can sell it outright. By considering trading in your current vehicle or selling it outright, doing so allows you to use that money toward a down payment. You will probably make more money selling it outright, but the dealership may negotiate the trade-in value with you as part of the arrangement at the dealership.
Find a Cosigner
If your credit score isn’t great, getting a car loan on your own without a down payment will be difficult. Finding a cosigner with good credit to sign the car loan with you will improve your chances of getting approved. A family member or friend with a strong credit score to cosign can get you the car without a down payment. However, know that that person shares the responsibility of payment and ownership. If you falter on the loan or fall behind on a payment, you are not only affecting your credit score but that of the cosigner, as well.
Finally, work with a reputable dealership that has experience selling cars to those without a down payment. Auto Action is one such dealer in Arizona that has redefined the used car buying process and works to help its customers secure a loan through them. The simple loan approval process allows its customers to shop with confidence for their next vehicle. Auto Action sells quality used cars. Each is backed with the AA Advantage Program—a worry-free limited warranty with 12 month/12,000 mile vehicle coverage, free oil changes for a year, Anti-theft protection and total loss protection. Buyers can drive away assured and satisfied that they are driving a safe, reliable car. Best of all there is no set down payment for any particular vehicle. At Auto Action, down payments are determined by each customer’s situation.