3 Ways To Purchase A Vehicle With No Down Payment
If you current vehicle sputters and rattles every time you go for a drive, it is time to start searching for a new vehicle. However, if you are short on cash, shopping for a new automobile often feels futile. Fortunately, you have options if you need to purchase a vehicle without a down payment. Here are three ways to buy a new-to-you vehicle without making a down payment.
1. Have a Trade-In
You can use your current vehicle as a trade-in, negating the need for a cash down payment. Though some dealers are picky about what trade-ins they'll accept, others will take vehicles that are not running. Though non-running vehicles are of little value to the dealer, giving you a small amount of money for the automobile can help close the deal if their financing department cannot approve you for 100 percent financing.
Some critics argue that it isn't cost effective to trade in an old vehicle because you can get more money via a private sale. While this may be true in theory, remember that it takes time to sell a vehicle. You also have to devote time and effort to marketing the vehicle and permitting potential buyers to see the vehicle in person and take it for a test drive. Trading in your old car is a much more convenient option.
2. Utilize Your (or a Loved One's) Exceptional Credit Score
If you have good credit and a verifiable income, the dealer's financing department may be able to approve you for an auto loan equal to the entire purchase price of the vehicle. To qualify for this type of deal and receive a low interest rate, you'll need to have stellar credit. Requirements vary from lender to lender, but you should ideally have a credit score of at least 700.
Even if your credit is only fair, you may still be able to qualify for 100 percent financing if you apply for the loan with a credit-worthy cosigner. The cosigner will bolster your application and increase the chance that you are approved for the loan.
3. Increase Your Budget for Your Monthly Payment
Some dealerships will approve loan applications with no down payment, even if the applicants have less-than-stellar credit. In exchange for this approval, you should expect to pay a higher interest rate than you would if you had good credit or a down payment. This will increase your monthly payment.
Remember that a higher interest rate isn't the end of the world; when you establish a positive payment history, you may be able to refinance your vehicle and obtain a better interest rate.
