100% Financing Car Loans: A Good Idea?

Get Car Financing
No Matter Your Credit Situation.

Car shoppers with a credit score under 680 will have a hard time getting a loan without a cosigner, but some bad credit car loans are available.

By

Automotive Editor

John Diether has been a professional writer, editor, and producer since 1997. His work can be found on TV, radio, web, and various publications throughout the world.  He is a graduate of Northwestern University and has a 1992 Cadillac Brougham d’Elegance in his garage. 


, Automotive Editor - June 10, 2016

Also known as no-money-down loans, 100% financing loans cover the full cost of the car you wish to purchase. Online lenders and credit unions are two of your options when in the market for this type of loan. Your credit score will factor heavily into the approval process.

With excellent credit, you are much more likely to be approved for a loan. Depending on the market conditions, some lenders will offer 100% financing loans for certain brands of automobiles. Occasionally lenders and dealers will work together to try and move their merchandise, and 100% financing is one of the ways to do it.

Managing payments

Having a payment you can afford to make every month is critical to maintaining good credit. Keep in mind, with 100% financing you will be paying back the entire amount of the purchase price plus interest, so the monthly payment might be correspondingly high. Some 100% financing loans are interest only loans, whereby you pay back only interest for a certain amount of time until you start paying back the principal.

Other terms

The terms of your 100% financing loan are important, for they will determine your interest rate, monthly payment and period of repayment. Good credit goes a long way in securing a favorable interest rate. Some 100% financing lenders might require that your trade-in (if you have one) is worth more than you owe in order to qualify. Also, the determination of the desired car's value plays a role in financing approval.

Through online lenders, you simply apply for the loan which usually comes with instant conditional approval. Then you work through your options, setting the length of the loan, start date, and due date each month. If you agree to automatic payments, a fraction of the interest rate may be knocked off.

Weighing your options

You have options when you seek a car loan. If your credit is excellent, you may qualify for 100% financing. If not, there are many opportunities available for you to lock in a great interest rate. Even if you have to pay a down payment, it is ultimately a good thing because it means less you'll have to pay in interest over time. Keep an open mind, and you'll find the loan that is perfect for you.

, Automotive Editor

John Diether has been a professional writer, editor, and producer since 1997. His work can be found on TV, radio, web, and various publications throughout the world.  He is a graduate of Northwestern University and has a 1992 Cadillac Brougham d’Elegance in his garage. 


Loan approval is not guranteed and is subject to credit application and approval of the lender. Individual loan terms may vary.