Can I Buy a Car With No Money Down?
Perhaps an unexpected life event has caused you to dip into your savings account, or maybe your car has broken down without giving you time to start saving for a replacement. Regardless of the circumstances, the harsh reality is that not everyone is fortunate enough to be able to save up for a new car.
If you’ve found yourself desperately needing a new vehicle without the extra money to pay for it in cash or afford a down payment, you might be wondering what your options are. Getting a car with no down payment may sound too good to be true, but it’s not! Keep reading to learn how to buy a car with no money down and discover the financing options that are available to you.
Down Payment vs. No Down Payment: What’s the Difference?
Unless you’re planning to pay for a car in cash, you’ll need to secure a loan whether you put down an initial payment or not. And if you’re having to finance your car with a loan regardless, you might be wondering why a down payment even matters. If you don’t have the money to make a down payment but you still need a car, you will have to finance the vehicle for $0 down. This means you’ll need to obtain a loan for the entire purchase price of the car and your monthly payments will be larger.
Paying for some of the car upfront allows you to get a smaller loan, meaning you will owe the lender less money overall. For example, if you’re putting $5,000 down on a $25,000 car, you’ll only need to finance $20,000. As a result, your monthly payments will be smaller, putting less of a burden on you financially. Although smaller monthly payments are enticing, there are still financing options for you to consider if you can’t afford a down payment. Let’s take a closer look at how to buy a car with no money down!
How to Buy a Car With No Money Down
1. Shop Around for the Best Loan
If you’re going to buy a car with no money down, you’ll want to obtain the best loan possible. Look for short-term loans with low rates to avoid accumulating interest and paying more for your car in the long run. Remember that you don’t have to accept the first loan you’re offered — shop around and apply to multiple lenders until you find the best loan.
Related: A Step-by-Step Guide to Financing Your Next Car
2. Get Pre-Approved
Whether you’re making a down payment or not, it’s a good idea to get pre-approved for a loan. Taking the extra time to do this can help you set a clear budget, get better interest rates, strengthen your negotiating power, and more. While you can get pre-approved for a loan at a bank or credit union, we make it easy by offering an online application.
Learn More: The Benefits of Getting Pre-Approved for a Car Loan
3. Find a Fairly Priced Vehicle
When purchasing a car without a down payment, it is more crucial than ever to find a fairly priced vehicle. Because you’re putting zero down, looking for a less expensive car means that you can get a smaller auto loan. Rather than buying a brand-new car, consider purchasing a used car for a lower cost. Utilize free online appraisal tools such as Kelley Blue Book or Edmonds to ensure you’re getting a fair price that is in line with the current market.
4. Trade-In Your Current Vehicle
If you currently own a vehicle, you typically have two options: sell it or trade it in. Trading in your car at the dealership allows you to apply its cash value toward your new vehicle. If your car’s trade-in value is worth more than you owe on it, this difference can become a substantial down payment — decreasing the amount you’ll owe on your auto loan. Click here to value your trade and see how much your car might be worth!
Related: How to Get the Best Price for Your Trade-in
Buying Your Next Car at Battleground Kia
Now that you know how to buy a car with no money down, it’s time to find the car of your dreams! Although it is possible to purchase a car without a down payment, you’ll likely get stuck with larger monthly payments and steeper interest rates. However, trading in your current vehicle, getting pre-approved for a loan, and shopping around the best offer can help offset these costs.
To get a better understanding of what your payments will look like without a down payment, utilize our monthly car payment calculator. If you have any questions about financing your car, our finance experts are here to guide you through the process and help you get into your new vehicle. Click the button below to contact us and start the financing process today!