You may have heard or seen car dealer advertisements on the radio or TV promoting offers to buy a new car with no money down. While it may seem too good to be true, it is possible to purchase a vehicle without a down payment.
However, buying a car with no down payment could lead to more costs down the line. So, before you rush to the car dealership, here’s what you should know:
- No Down Payment = Higher Car Payments
Since most car buyers opt to get approved for a car loan or financing to purchase a vehicle (as opposed to paying in cash), the option of making a down payment is usually factored into the equation. When you’re buying a car, one thing to keep in mind is the fact that you’re paying for more than just the price of the car. There are state taxes and registration fees as well as other dealership fees that are usually factored into the total cost of the vehicle. Not making a down payment will most likely result in a higher financing cost, which means higher monthly car payments. In some cases, you may even wind up paying more than the car is worth.
- Down Payment = Lower Car Payments
If you’re a car buyer with bad credit or no credit, some auto lenders and finance companies may require a higher down payment because of your credit history. In any case, whatever amount you give for a down payment will help reduce your total vehicle cost and monthly car payments. If you don’t have any money saved for a down payment and plan on trading in your vehicle, your current car can be used as part of your down payment if you have car equity (the value of the vehicle minus the amount owed on your car loan or financing).
- Find the Right Financing Option for You
Shopping around for the right car financing options can help make the car buying process go much smoother.
If you’re a car buyer with bad credit or no credit and need help getting approved for financing, a car dealership enrolled in the Credit Acceptance program can help. Simply fill out the form on our website by clicking the link below and we’ll connect you with a car dealership in your area that can help you get started!
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