Auto Loans With No Down Payment. Is It Possible?

Posted by Ryan on August 6th, 2019

Down payment is an alternative option created to remedy the hapless condition of consumers who wish to get a loan but are hampered by their poor credit history and very low credit scores. It typically entails paying a specified sum of money as a nonrefundable deposit prior to the acquisition of the loan from the lender. The purpose of a down payment is to serve as some form of commitment in the negotiation; since the borrower's creditworthiness is in question. Thus, the amount of money a borrower puts down is inversely proportional to the interest rate of the loan. In other words, the higher the down payment, the better the rates.

The United States has a robust group of financial institutions and the market competition between them has paved way for the creation of several other options to accommodate potential clients. A good number of corporate establishments offer auto loans to customers without a down payment. Hence there would be no gainsaying in affirming that indeed it is possible to get an auto loan with bad credit without a down payment.

There are two instances which would prompt the acquisition of auto loans without the requirement of down payment.

1. When the borrower has a good credit score

When the borrower has a good credit score, there is really no need for down payment since the purpose of the down payment is to commit the borrower and serve as an attestation to his capacity to pay up the loan. Also, the rates for the loan will be very friendly to the potential customer if his credit score is good. Thus, there would be no need for down payment of any sort. Generally, persons with credit scores ranging from 650 to 750 get loans without making down payments.

2. When the borrower has no money for a down payment

When the borrower has no money to put down, the financial institution, or auto dealer may create other options. This usually takes the form of an increase in the interest rate introduction of cosigners and sometimes increases the price of the car. This has the effect of making the borrower pay more in the long run.

An example of such an option created for borrowers who can't meet up with a down payment is layaway. Layaway is an arrangement whereby the dealer tells the buyer the smallest down payment he can make. The buyer then pays some money (usually -) and then the car is marked as "sold". Thereafter, the buyer pays a fixed sum weekly pending on his earnings. The payment will continue until the down payment is reached and the car will not be sold to someone else. Learn more about down payments via

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