Finding a 0 Down Payment Car

Get Car Financing
Even with poor credit.

By

Contributing Writer

Amy Fortune is a contributing writer for CarsDirect and lead writer/editor for AutoCreditExpress. She also contributes regularly to several other high-traffic blogs. Amy was born in North Carolina and grew up with an appreciation for NASCAR and everything automotive. Now based in the Motor City, she continues to be happily immersed in car culture and automotive finance.


, Contributing Writer - October 14, 2016

If you have good credit, it should be easy to finance a car with no money down. However, if you have fair or poor credit, finding a 0 down payment car will be more challenging. Also, if you do have a lower credit score, having a down payment may help you get approved for an auto loan and save you money in financing costs.

Buying a 0 Down Payment Car with Good Credit

It isn't hard to find an auto dealership advertising 0 down payment deals. Of course, you have to realize that these offers are intended for consumers with the best credit. But if you fall into this category, buying a vehicle with no money down is an option.

Even if you qualify for a 0 down payment offer, you may still want to provide a down payment. Putting cash up front on your vehicle purchase will help in two ways:

  • You will save money in interest fees. By decreasing the balance of your auto loan with a down payment, you won't have to pay as much in interest over the loan term.
  • You will build equity in the car. This is especially important if you're buying a new car that will depreciate in value quickly. In this case, a large down payment can offset immediate depreciation and prevent you from being upside down in your loan.

On the other hand, if your interest rate is low enough (0%-2%), what you save in financing costs with a down payment would be negligible. At this point, keeping the cash in your wallet might actually be preferable.

Just be sure to invest in GAP coverage if you finance a new car with 0 down. This type of insurance covers the difference between the current value of the vehicle and your loan balance if the car is totaled in an accident. GAP coverage is relatively inexpensive, and it could save you thousands of dollars.

Down Payments and Bad Credit

It is possible to find a 0 down payment car with bad credit. However, it is less likely that a buyer with a low credit score will be able to finance a vehicle with no money down. Not only that, if you're looking to purchase a car with damaged credit, having a down payment is highly recommended.

For car buyers with bad credit, down payments come with several benefits:

  • You will save a lot of money in interest charges. Typically, consumers with less than perfect credit face higher interest rates on their auto loans. Therefore, decreasing the amount you borrow with a large down payment will earn you significant savings down the road.
  • It might be easier to get a loan approval. Lenders base approval decisions on risk. So when your down payment reduces the size of your loan, it will also decrease the risk for the lender. This may be enough to tip the odds in your favor if other factors are working against you.
  • Investing in your purchase sends the right message to the lender. Willingness to put your own cash on the line lets the lender know that you’re a serious about paying back the loan. Your down payment, in fact, represents a level of commitment that might make an auto loan approval more likely.

Having a bigger down payment is always better than a smaller one, but any amount will be helpful. And if you have equity in a car at trade in time, its cash value can be included in your down payment.

The Easiest Way to Buy a Car with any Credit Type

Whether you have good, fair, bad or no credit, CarsDirect can make the vehicle buying process fast and easy. We've partnered with the best car loan providers, so you're sure to get both the car and the financing that's right for you. Our secure 1-Step Auto Loan Application only takes a minute to complete. So go ahead and get started today.

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, Contributing Writer

Amy Fortune is a contributing writer for CarsDirect and lead writer/editor for AutoCreditExpress. She also contributes regularly to several other high-traffic blogs. Amy was born in North Carolina and grew up with an appreciation for NASCAR and everything automotive. Now based in the Motor City, she continues to be happily immersed in car culture and automotive finance.


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