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How To Buy A New Car Without Down Payment
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There are some ways to get a new car without coming up with a down payment. With some preparation, research and perseverance, you should be able to get that new car without paying any of the purchase price out of pocket.
There are some ways to get a new car without coming up with a down payment. With some preparation, research and perseverance, you should be able to get that new car without paying any of the purchase price out of pocket.
Have a Good Credit Score and Financials
Having a strong credit score and history, plus a good income, are important ingredients in getting any kind of car loan. The stronger these are, the better will be the terms of your loan. A no down payment car loan is also called 100% financing. This usually requires having a credit score of 700 or higher, a stable job of over 6 months and annual income that exceeds the cost of the car.
If you are weak in these areas and can wait to get the new car – you should work on strengthening these factors. You can increase your credit score by paying off some of your credit card debt and even getting rid of some of your credit cards. Also, you can get extra work to increase the amount of your income. Choosing a car for the least price possible will also help you to secure a 100% loan.
Get a Loan With a Co-Signer
If you have a friend of family member who is willing to co-sign a car loan with you, this can help to secure a 100% loan. The co-signer must have a strong credit score and income. This will help to convince the lender that the car loan will be paid, even if you yourself have weakness in your credit or income.
Be aware that the co-signer will be fully liable to make the car loan payments if you don’t. Also, it often will be required that the co-signer be an additional registered owner of the car.
Creative Financing
A common way to make no down payment – at least out of your pocket – is to sell a car you already have and use the sales proceeds to cover the down payment. This can also be done by trading in your current car to the dealer as part of the purchase arrangement.
See if any new car models offer a rebate from the manufacturer. If so, many times this can be used in lieu of a down payment.
Another way to raise the down payment is to borrow it, such as through a credit card or a separate loan. Be aware however, that this can cause a worsening of your credit score. Sometimes you can borrow against a life insurance policy or pension, without it effecting your credit score.
Alternatives
Sometimes car dealers will want to get rid of last year’s models or a discontinued model. They may be willing to offer you 100% financing as an inducement to buy such a car – even if your credit or income are not the strongest.
You may also consider leasing a new car, rather than buying one. Often lease companies can arrange a lease without any cash down payment. There are also sometimes “rent to own” deals, where you rent the car, and some of the monthly rental payment will go towards a purchase down payment when you buy the car in the near future.
