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Should you Buy a Car without a Down Payment?

Should you Buy a Car without a Down Payment?

Canadians that want to buy a car but lack the cash on hand for a down payment may qualify for a zero-down car loan. Having a down payment helps demonstrate you are serious about buying a car but carmakers understand that most prospective buyers do not have the cash available.

 

Our Flamborough auto loans team explains how to buy a car without a down payment while avoiding risky borrowing.

 

Zero percent interest vs cashback

 

All of the major carmakers offer incentives like zero percent purchase financing, cash back, or a combination of the two to try and attract qualified buyers.

 

The keyword is qualified buyers, these carmakers want to attract the most creditworthy customers because they know the risk of defaulting on the loan is low and they can sell a car in the process.

 

To qualify for that type of promotion, your credit score needs to exceed 720 and your income must be verifiable, otherwise, you would not be able to get these very competitive offers.

 

The good news, even if your credit score is below 720, you can buy a new car but you will pay a slightly higher interest rate than those who qualify for zero-percent financing.

 

Qualifying for an auto loan with less than perfect credit

 

While the major banks focus on customers with near-perfect credit, you can easily get your auto loan approved by getting help from a local dealership.

 

The dealership will have existing relationships with lenders who focus on helping customers with credit challenges buy cars.

 

Most lenders prefer borrowers with a credit score over 620 if you are not sure whether you qualify, there are apps that you can download for free to check your credit score.

 

Rebuilding your credit

 

Should you find yourself in a situation where your credit score is below 680, the dealership will help draft a plan to get on a better financial footing.

 

The dealership will give you a play-by-play guide to rebuilding your credit but will also help get you a car loan today.

 

You should prepare yourself mentally for a higher interest rate but once your credit has been re-established which usually takes 12-18 months, you can refinance the Flamborough car loan to a prime rate.

 

Buying a car with great resale value

 

You are going to be spending a substantial amount of money on a new car, so look for those that have great resale value. The dealership would be able to give you insight into which cars hold their value over the long term.

 

With a limited supply of cars available in the market, there has never been a better time to trade in a car, this is why we suggest picking cars with great resale value so when it comes time to upgrade, you will get top dollar for your new car.

 

There are many different lenders out there that will help you buy a new car, the only effective way you will be able to find these lenders is to get help from your local dealership.

 

Now that you know how to buy a new car without a down payment, you can schedule a test drive at your local dealership.

 

When you’re ready for a car lease or loan, get in touch with the Flamborough auto loan experts at Northway Ford for great deals on auto finance.

 

For any questions, concerns, or inquiries. Please don’t hesitate to contact us here!

 

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Categories: Car Loan

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