A car is a “must-have” for most Americans, but not everyone can afford it. Although multiple lenders require excellent credit scores from borrowers, there are still alternatives for people with bad credit. Keep reading to discover how to get a car with no money.
How Does a Car Loan with Zero Down Payment Work?
Significant purchases often require a down payment. When purchasing a vehicle, you must pay a specific percentage of the total auto amount in advance. It includes the trade-in value of your current car or/and other expenses.
Using no money down car loans lets you finance the vehicle expense. Many online lenders offer auto loans with zero down payment for bad credit borrowers. It can help you finance your car purchase and release you from saving money for years.
Do You Need to Pay a Down Payment for Auto Loans?
Even a small down payment can help save you money. It can increase your chances of approval from a greater number of lenders. Furthermore, it helps you get lower interest rates and make fewer monthly payments.
Pros of a No Money Down Car Loan
Pay attention to the main advantages of an auto loan with no down payment to make a purchasing decision.
Immediate Car Purchase
With auto loans with no money down payment, you don’t need to wait for years until you save funds to make a down payment. Click here to know more. Auto lenders typically offer you a possibility of an instant purchase.
Saving Funds for Other Goals
Many lenders release you from giving all your savings to the down payment, so you can use them to pay for other debts or other purposes.
Cons of a No Money Down Car Loan
Applying for a no-down payment car loan has several drawbacks, such as:
Risk of Losing Funds
There is always a high risk that the cost of your new car can significantly decrease, making you repay the debt bigger than your vehicle is worth.
Higher Loan Amount
When applying for a bad credit car loan with no money down payment, be prepared to make higher monthly payments. They include your state taxes, fees, and other costs.
Higher Interest Rate
Taking an auto loan with no down payment, you always pay more. Even with a good credit score, you will need to pay high-interest rates.
How to Get a Low Car Payment?
Here are some helpful tips for car buyers to qualify for a bad credit auto loan with a low payment:
Improve Your Credit Score
Borrowers with a low credit score are less likely to get a car loan with no down payment on favorable terms. There are many ways to improve your credit score, such as:
- Making on-time payments;
- Consolidation of outstanding debts;
- Leaving your credit card accounts open.
Monitor Your Credit Report
Checking the information in your credit report is one of the main steps to having a good credit history, which can help you get an auto loan with no down payment.
Compare Loan Offers
It is important to analyze all the potential lenders to choose the most profitable conditions.
Prequalify for a Loan
Many lenders offer free prequalification, so take this chance to see how likely you are to get approved for a loan.
Consider Buying a Cheaper or Used Car
Low-priced or used cars are cheaper and allow you to apply for smaller amounts and get financing without an initial down payment.
How Can Bad Credit Borrowers Buy a Car Without a Down Payment?
Don’t worry if your credit score is less than perfect! If you have steady employment and income, you can still receive car loans without a down payment. Even if a traditional bank or credit union refuses you because of your bad credit, there are several alternatives for borrowers with unfair credit scores. For example, you can do the following:
Apply for a Buy Here Pay Here Loan
Most dealers offering car purchasing options for bad credit borrowers are no-money-down car lots. These loans are an excellent alternative allowing you to get a one-sum payment to your bank account.
Search Online Lenders
There are numerous online alternatives to traditional financial institutions with no credit check. However, these options often have inconvenient loan terms, making repaying the funds impossible. Therefore, before you borrow money, ensure you can return it.
Find a Cosigner
One of the most profitable ways to buy a vehicle is to hire a cosigner. If you have a friend or relative with a better credit score, ask them to help you with the loan application.
What Are the Car Loan Eligibility Criteria?
While several lenders report to credit agencies to assess your financial situation, others focus on your income and dealing with debt obligations. However, there are certain criteria that all borrowers must meet:
- Be 18 years of age or older;
- Have a stable income;
- Be employed for at least a year;
- Have an active checking account;
- Have a phone number and email address;
- Be a U.S. citizen or permanent resident;
- Have no active bankruptcies.
Bottom Line
There are different ways to buy a car with no money. You can choose between a vehicle loan with or without a down payment. You can trade in your current auto to get the money for the payment or apply for a loan without this step.
FAQ
Can I Get a Car with No Down Payment?
Yes, it is possible to buy a car with no down payment. However, you often need to meet several criteria, such as having a trade-in with positive equity, a good credit score, and no bankruptcy.
I Need a Car But Have No Money or a Job. What Can I Do?
Most lenders don’t require employment, so you can have a stable income from alimony, child support, retirement, etc. If you are interested in how to get a car with no money, you can find collateral.
Do I Need a Collateral for a Bad Credit Car Loan?
Bad credit car loans are a type of secured loan, so a car dealer will require collateral to buy a used or new car.
