Everything that You Need to Know About 0 Down Car Loans

0 down car loans are also known as no cash down loans. These loans can be obtained very easily provided the lender feels that the borrower is repaying a fair price for the car; has trade-in or is getting the loan from trusted local dealerships. As part of the deal, the borrowers need to provide income proof through pay stubs. The procedure is carried out for ensuring that the borrower has the ability of paying back the loan. Availing a no money down car loan is one of the best options for bad credit borrowers. However, it is necessary to shop around carefully to ensure that you are obtaining the right loan at the right rates of interest. That being said, it is quite convenient to purchase a car without down payment and it is also very easy to shop for no money down loans. However, there are several reasons behind approaching such offers with great caution especially for the individuals with bad or poor credit.

Shopping Around for No Money Down Car Finance Options

One of the biggest concerns for individuals going for a zero down car loan is the high APRs of these loans. The no money down financing options with low APRs are only offered to the borrowers who have good credit ratings or ratings above 700. So, in order to avail the best offer on such loans it is important for you to have good credit. However, if you do not have good credit then make sure to shop around and negotiate the prices and the interest rates. You also have the option of getting a good price for the vehicle and then using your trade-in if you have got one.

Avoid applying to just one lending organization and then giving up the entire procedure if the company says that you will have to go for a down payment. Remember, there are more lending organizations in the market and you always have the option of applying for 0 down car loans at these lenders. The more applications you indulge in, the better will be your chances of getting hold of a loan that perfectly works for your requirements. Always keep in mind that applying for a no money car finance at multiple lenders will not hurt your credit in any ways provided you submit all the applications within a time span of 14 days. The potential lending organizations where you can submit your no money down car loan applications are credit unions, online lenders and banks.

The Advantages and the Disadvantages of No Money Down Car Loans

The most basic advantage of going for a zero down car loan is that there is absolutely no need for you to dish out a huge amount o your hard earned money in just one sitting. Getting a no money down car finance means that there is no need for you to pay a huge amount of money at once but a little more every month instead.

Coming to the disadvantages of these loans, there are some points that you need to ponder on and they are as follows:

  • You might find yourself making extra payment for the vehicle that you want to purchase. Your car might lose its value even before the completion of your loan repayment term.
  • You will not have much equity in your vehicle which means that it will take you several months to claim a part of the vehicle ownership.
  • The rates of interest on no money down automobile loans are higher than the down payment car loans. This is mainly because the lending organizations consider these loans to be high risk finances and thus they end up levying more monthly charges against these loans.

Are You Eligible for a Zero Down Car Loan?

Even before a local dealership sells you a vehicle without any down payment, it will want to have a clear understanding of your financial health. The dealership will try and determine whether or not you are in good financial health by having a look at your credit rating. High credit scores or scores higher than 600 might make you eligible for the finance but in that case you will have to make higher payments in the form of interest rates on the loans. There are some important factors that the lenders will take into consideration prior to determining whether or not a customer is fully approved for a zero money down finance. The factors are as follows:

  • They will have a look at the monthly budget of the borrower. They will determine whether the payment would fit into the average monthly expenditure habit of the borrower once he or she has paid the other bills.
  • Another important factor that the lending organizations will consider is the credit score and history of the borrowers. They will have a look at your credit history and determine whether you have successfully paid off all your loans in the recent past.
  • The lenders will also ensure that they are availing the right deal.

So, one thing is clear that the financial organizations or lenders that indulge in the provision of zero down payment loans in cars always have a detailed look at the financial status of the borrowers prior to doing anything further. If larger down payment make sense and can help lower the costs of a car, they can even help with that by presenting the right options.

Conclusion

At the very first glance, 0 down car loans will be exactly what they appear. You get a car at a certain price that is agreed upon and then start making monthly payments on the car principal without any rate of interest. Nevertheless, there are some important points to keep in mind. The 0% interest night only be provided on a part of the car loan term. You will have to have good credit for getting approved for such loans. It might also get a little difficult for you to negotiate on the car price.