If you’re beginning the car-buying process, you’re likely wondering if getting a car with no down payment? The short answer is yes, depending on your circumstances and how you choose to finance your purchase. Keep reading to learn more about what you need to know to purchase a car with no down payment.
- Boost Your Credit Score
Any finance professional will tell you that having poor credit is one of the most significant barriers to buying a car with no down payment. Since most cars are financed, lenders will check the buyer’s FICO score in their risk assessment process. However, when financing a large purchase like a vehicle, they typically want to see evidence that the buyer can handle paying their other bills on time.
Statistics show that 42% of millennials have subprime credit scores. If you’re in debt and haven’t paid off any recent purchases in full yet, try fixing your credit before attempting to purchase a car.
- Consider Getting a Cosigner
If you want to buy a car with no down payment and don’t have any credit history or collateral, you might want to consider a cosigner. Your cosigner should have enough income, credit, or assets to qualify for an auto loan on your behalf. While the cosigner may not be putting up money toward the purchase, they take on some financial risk.
- Shop Around
Another important tip to help you purchase a car without a downpayment is to ask about your options. For example, some auto dealers will offer special deals on financing, such as waiving all or part of your down payment. Before you sign any papers, try shopping around for a better deal. Please start the process by contacting several credit unions and banks in your area to learn about their options for auto financing.
- Try Auto Refinancing
Another option to purchase a car with no down payment is to refinance auto loans. Auto refinancing is similar to home refinancing. It lets you lower your monthly payments by extending your loan term or reallocating how much each payment goes toward interest and principal.
The experts at Lantern by Sofi share that many dealerships offer solutions to refinance auto loans and are more than happy to help customers secure an affordable monthly payment on their next purchase. To refinance your auto loan, contact your lender and discuss your options.
- Save Money for the Down Payment
While you may want to purchase a car outright, paying a down payment may be the best to get your vehicle. Start saving up if you don’t have enough cash to pay for the car in full or make your monthly payments. Instead of waiting around for your dream vehicle, saving money now for a down payment first will help you begin car ownership with financial stability.
If you are in the market to buy a new car, many different types of financing are available to you. Use this guide to help you discover the best way to purchase your next car without a downpayment at all.
