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Should I Buy a Car Without a Down Payment in Binbrook?

Should I Buy a Car Without a Down Payment in Binbrook?

It’s customer question time again and this time, it’s a classic question we’re asked a lot. ‘I need a car for work but don’t have a down payment. Can I get one and is it a good idea to buy a car without a down payment?’


This is a common situation we see a lot so we asked our Binbrook auto loans team to explain what happens if you don’t have a down payment.


Down payments and Binbrook auto loans


Down payments play several roles within the average car purchase. Few of us have the resources to buy a car outright so will finance the car, which is where a down payment really helps.


  • A down payment reduces the amount you borrow, which makes the entire loan cheaper
  • A down payment improves your chances of being approved for the loan, because borrowers with their own money at stake are less likely to default
  • A down payment reduces the time or chance of being upside down when buying a new car
  • A down payment reduces the interest rate you’ll be charged compared to a no money down auto loan
  • A down payment offsets a less than ideal credit score when borrowing larger amounts of money


As you can see, the auto loan down payment has an important part to play in a new car purchase.


Car loans without a down payment


You can buy a car without one but it isn’t ideal. You will likely be charged a higher rate of interest because the lender is assuming more risk.


With no money down, you have little to lose except your credit score if you default. The lender on the other hand, has a lot at stake.


To offset that risk, they will charger a higher interest rate on the loan.


No money down auto loans are very definitely a thing and come in very useful when there is no other choice, but they aren’t the recommended option.


You are much better off buying a cheaper car or waiting as long as you can to save a down payment.


If you need a car for work right now, a cheaper car should suffice while you save.


If you have some time and could live with your current car a little while longer, take the time to save for that down payment will save a lot in the long run.


Buying a used car is also an option if you’re struggling to save a down payment. The initial depreciation has already happened, so you’re less likely to go upside down and they are cheaper than buying new.


No money down auto loans are an option but definitely not the preferred option. We can secure this type of loan if you really need one but there are better, cheaper ways to finance a car.


Contact our team to learn more.


Contact Unique Chrysler for help, advice and competitive Binbrook car finance and leasing.


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Categories: Auto Loan

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