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No Down Payment Auto Loans

No down payment auto loans are an excellent way for people who are strapped for cash to be able to purchase a car.

In a no down payment auto loan, a person only has to make the monthly payments and not put up any money down. This can save a person several hundred dollars when they take out a car loan.

A no down payment auto loan is the only way that many lower income people are able to afford a car. Most people will be able to qualify for no down payment auto loans but there are costs to no down payment auto loans.

Drawbacks to No Down Payment Auto Loans 

There are some serious drawbacks to no down payment auto loans that every car buyer should be aware of.

A no down payment auto loan could cost a borrower more because lenders often charge higher interest rates on no down payment auto loans. Since the interest rate determines the cost of the loan, a higher interest rate will mean the loan will cost more. Many dealers will charge a higher interest rate if no down payment is made.

In particular, persons with bad or poor credit ratings will have to pay higher interest rates on no down payment auto loans. Some dealers will encourage no down payment auto loans because they can make more money from them.

It is often to your advantage to put up a down payment if you can. Putting up a down payment could get you better deal and a lower interest rate on a car loan.

Advantages to No Down Payment Auto Loans

The biggest advantage to no down payment auto loans is an obvious one: the borrower doesn’t have to come up with a large sum for a down payment. This can enable a person to get a car faster without using their savings or much of their income to buy the car.

For persons with a low or limited income, a no down payment auto loan will be the only way to get a car. Individuals who don’t have another vehicle to trade in can also get a no down payment auto loan.

This means that a person can buy a car without trading in their existing vehicle. It also spares a person the headache of trying to figure out how much the trade in is worth.

Getting No Down Payment Auto Loans

The best way to get no down payment auto loans is to ask for them. Most dealers and lenders do offer down payment auto loans.

Many dealers and lenders will try to talk you into making a down payment because it’s better for them. It should also be possible to get no down payment auto loans by asking for them.

One thing to remember is that a person may have to get a credit check to get no down payment auto loans. Some dealers and lenders will not make no down payment loans to those with bad credit. A person with bad credit may have to go to a small or independent dealer to get a no down payment auto loan.