If you’re looking for car finance, you may be concerned about the deposit. After all, many lenders will require a deposit in order to provide you with finance.
However, do you need a deposit to get car finance?
Here’s a guide to what you need to know about getting car finance with no deposit.
Find a Lender Who Does Not Require a Deposit
There are many lenders who provide car finance, and they all have different conditions.
Some will only lend to people with a very good credit score, while some will lend to people even if they have bad credit.
While some lenders will always require a deposit, you may be able to find a lender that states that they do not require a deposit, and this should be your starting point.
How No-Deposit Car Finance Works
Quite simply, no-deposit car finance means that you do not need to pay a deposit in order to get car finance.
Often, you need to save up before buying a car in order to provide a deposit, so this provides you with an option where you do not have to save.
You can simply start paying for your car without a deposit, and this makes it more accessible if you are having trouble saving up a lump sum.
What You Have to Know
If the lender does not require a deposit in order to provide car finance, there are a few things that you may need to be aware of.
If you do not provide a deposit, the monthly payments are likely to be higher. This is because you are borrowing more of the cost of the car.
If you provide a deposit, you will borrow less in total, leading to lower payments.
Your credit score is also important. Most lenders will want you to have a good credit score in order to get car finance without a deposit.
One of the ways they offset the risk when lenders have a bad credit score is by asking for a larger deposit.
Specific Requirements Vary
You will find that the lenders have a few specific requirements that will vary. Nearly always, you will have to be 18 or older.
You may also need to provide various application documents including your proof of address and your driver’s licence.
Lenders will usually have an affordability test as well that you will need to pass.
This will give them confidence that you can make your repayments.
Using Your Car as a Deposit
If you already have a car that you want to sell, you may be able to use this as a deposit.
You may be able to find a lender who provides a valuation tool so you can get a clear idea of how much your existing car is worth, and you can then use that as your deposit.
Start Your Search for Car Finance with No Deposit
Start searching for your next car finance deal today. Look around and try to find lenders who do not require a deposit, then check the different providers and find out more about what they require in order for you to qualify.
Ask them questions about their process, and you will get a good idea about whether you are able to qualify for car finance with no deposit.