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Some Facts About No Money Down Car Loans

The down payment plays a vital role while qualifying for a car loan, especially if you have less than perfect credit. The college students or low wage earners often do not wish to utilize their own cash as a down payment due to inadequate finance. And so, look out for no money down car loan option. Well, you will find lot of car dealers and financial institutes who can offer zero down car loans regardless of your credit history; however you may have to pay higher rates. In addition to that, you may not get favorable terms while the chances of being ripped-off are more.

Many people carry this myth that cash is the only form of down payment but, there are few other options which many people are not aware of. Some of which are discussed below.

One of the best ways if you have a car to trade-in is, using a combination of trade-in and car loan with no money down. Whereby, you need to trade-in your used car and have the appraised value of the old vehicle deducted from the price of the new car. Most of the car financing companies allows considering trade in value as down payment to meet the minimum criteria of money down which becomes beneficial for both the car dealer and the borrower.

For Instance, if you wish to buy a car for $15000 with no down and have a trade-in worth $500. However, you are required to put down $2000 on the selling price as per the financing terms. So, what the dealer does is, raises the selling price to $17000 and show that you put down $2500 since the trade value is $500. Whereby, your net purchase price will come to 14,500 i.e. $15000 minus $500 from trade in. Thus, your purchase price remains the same as it would have been if the dealer sold the car at $15000 and gave $500 as trade-in.

In this way, it can help you to secure a car loan with zero down and bad or no credit history while getting you flexible terms at lower rates. If the car you are trading is not paid in full that is the only time you where you have to consider other options.

Another option you can have if you don't have a car to trade in or the car you are thinking to trade in is not fully paid is new car rebate where many lenders consider the new car rebates as a down payment. These rebates are offered by the lender to help that car buyers meet their minimum required down payment.

There are financing companies offering auto loan programs with zero money down and if you have a vehicle to trade in or buy a new car with a rebate you are most likely get more favorable terms from lenders with lowest possible rates. However, its advisable to put at least 20% money down as there are chance of being upside down or having negative equity on your car, where you owe more than the car's worth, if the value of the car depreciate.

Guaranteed car loan is an assured way of hassle free car financing and within no time you can get your car regardless of bad credit history. People in low income group or students who have just started with their job do not have enough cash to pay down payment and thus often face difficulty getting a car loan. For them offers no money down car loans which helps you finance your car with zero down.


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