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Zero Down Car Loan AdvantagesThe first advantage a person thinks of when looking at a Zero Down Car Loan is that they will not have to put up any money to buy a car.The truth is that most car dealers who advertise “0 Down Auto Loans” require you to qualify for their cars with no down payment program. This means you will need a high credit rating and good auto loan history. Most who qualify for a zero down car loan could afford a down payment.Those who cannot, probably won’t qualify for the better rates, but you could still get a loan without the down payment if you are willing to pay a higher APR.Many who apply for a no money down car loan find themselves in need of a car as soon as possible. They have lost their transportation and don’t have time to save up a down payment. So where is the zero down car loan advantages?With 0 down payment cars, the down payment one would typically pay is instead structured into the car loan. Outwardly this seems to be more expensive over time but remember that you are borrowing money for the car and the down payment.Other types of the dealer offered no down payment car loans are through “trade equity” and “vehicle rebates” (new automobiles).What About Zero Down Auto Refinancing for Cash Back?People who need to get the equity out of their car for unexpected bills need a zero down loan so they can get the most money available from their car.It is typical for people needing money to refinance their car for cash out instead of getting a personal loan. Personal loans carry higher Interest rates and high monthly payments compared to “no down payment car refinancing.”Personal loans can provide larger amounts of money than most fast cash or payday loans can without a down payment. However, refinancing your car can provide the same cash in your pocket as a personal loan but at a much lower APR.Planning and taking steps towards a divorce or a divorce with child custody is extremely expensive. We have helped many people get the money they need fast. 0 down refinancing can supply money for lawyer retainer fees, other legal fees or anything that requires a large amount of cash fast.Lets look at some 0 down car refinancing facts:Your Cars Equity Value- can only be converted to cash if the customer has a vehicle of some value to refinance. Compare the resale value of your car to what you still owe. The difference is your equity. Simply put, you can reclaim this cash by refinancing your car.Cash or Down payment?- Equity can be used as a down payment for a new car loan. If the car is not worth the entire down payment, the dealer will show the full amount needed and roll the remainder into the car loan. Refinancing your car loan can convert this equity to usable cashLower your payments- No money down car refinancing can lower your monthly car payments while the loan puts money back into your pockets by extending your loan terms. No down payment for a car is required with most car refinancing.
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How Do Zero Down Auto Loans Work?Some dealers will ask for a down payment anywayDealers will apply your trade-in to a down paymentRoll the down payment into the borrowed amount0 down payment car dealers may advertise low mileage certified used cars with a warranty, then ask to include a down payment on the loan. Without actually committing false advertising, the car salesperson may request the customer to make a small down payment to buy a vehicle. This is because the financing is done through a third-party bank or lender, and they require a down payment.However, car dealers have figured out ways 3 that customers do not have to come up with the cash to make a down payment, which is why they can boldly say, zero down car loans.0 Down Cars & Trade-InsEven though the person did not have to come up with the cash, they did have to use the value of their trade-in. When the no money down car dealers advertise that they offer a zero down car financing program (to qualified buyers), it may be legal, and is a great pull to bring in customers, but, in this case, it is not true.Later Expenses Under Water or negative equity, with 0 down car loans, the amount the buyer owes on their car loan after paying for two or three years is more than the car is actually worth.If a down payment were given at the beginning, the buyer could often sell the vehicle for a price that will allow them to pay off the loan. In the case of zero down auto loans, this is often not the case.The car may be falling apart with no repair warranties, but the owner cannot afford to give it up, and all the while they are still making payments on their ‘fantastic’ zero down payment car loan. If making a down payment of any kind is out of the question, a good lease agreement is far better than this type of debt spiral.Some new car lease deals can supply you with a car that has affordable payments, then at the end of the lease you could choose the lease buyout option to own the car and can get an auto loan to pay for it.Many zero down car deals are made for convenience. An impulse decision to purchase a car without planning ahead can lead someone into cars with no down payment because they have not taken the time to put together a good down payment.
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Zero Down Car Dealer DisadvantagesRolling some of the down payment into the loan doesn’t seem so bad, in fact, it seems like a good deal if you need a car fast. However, there are 0 down cars offered at car dealer lots that can cost the buyer much more in the long run.Car dealer scams presented to you by dealerships when working on the funding, do not seem to be car scams at all.Many people do not understand the intricacies of interest rates and their impact on a zero down car financing loan. The problem comes later when you are trying to pay off the loan.No Money Down Car Dealers work no down payment scams all the time.The zero down car dealers will convince the buyer that driving a car off the lot in exchange for nothing is a great deal. People can get the impression that no money down cars from dealers are easier to get, and all they have to do is qualify for financing. These scams are usually aimed at people with good credit who could afford a down payment.Even car buyers with good credit will consider a car finance deal like this to get no money down vehicles without saving a down payment. If they used a car payment calculator to check the finance offer, they would see how much money they stand to lose.The Value of No Down Payment Cars Can Fall FastWithout making a down payment, the buyer may take three years just to cut the loan in half. If you make a down payment up front, the amount owed in three years can be significantly reduced and, often, the loan can be completely repaid in a little more than three years.A simple way to estimate your costs for no down payment car loans is to use an auto loan payoff calculator. This will show you your payments with no money down or how your payments will change over the term of the loan by putting up a small down payment.For college students, that can mean the difference of having the no money down car loan to pay back as well as the school loan at the end of three years. The higher the interest rate, the longer it will take to repay the car loan with no down payment. This is because the monthly payments are going towards the interest on the loan and not the principal. If the principal is not paid down, this can go on for years.
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Tips For Choosing The Best Car LoanBefore deciding to purchase a 0 down payment car loan, it is critical to understand your financial situation. If you have a below average credit rating and need a car loan with a good APR, the first step is to check your credit report to be sure you qualify for a car loan. If your credit is less than perfect, you can still obtain financing although your interest rate may be higher than someone with perfect credit. It may be harder to get financing with poor credit if you do not have a down payment.Valley Auto Loans uses lenders who specialize in auto loans for people with subprime credit scores. These lenders look closer at the applicant’s ability to pay back the loan with a steady job and not rely on the credit score for the determining factor.What kind of credit score to buy a car do I need? Many dealers and lenders are using a new credit score report that will have a different credit score than the one you see.We do recommend, correcting any problems on your credit report before going shopping for a new vehicle is strongly advised. You will also need to provide proof of income and address to the lender when you apply for the loan, so be sure to have that information available and take the right steps to reconstruct your credit score.Sell Your Old Car If you have an old car that you are considering trading in to purchase a new one, it is often better financially if you sell the car yourself, especially if the vehicle is in excellent condition with low mileage. However, if your car has mechanical problems or is in poor condition, it may be difficult to sell. In that case, it is better to trade in your current vehicle at the dealer to lower your down payment when financing.Keep in mind that no matter what condition the vehicle is in, the dealer will offer less than the trade-in value. You will need to factor that in when determining how much you will have for a down payment if part of that down payment is the trade-in.Lower Monthly CostsYou should try to give a decent down payment to lower your monthly payments. However, what many consumers do not know is that a lender can do some things to get the monthly payment where you need it to be to fit your budget, so you do not have to write a down payment check.If your credit rating is high enough, they can lower the interest rate, or they can offer a longer term of the loan, allowing you to pay for six years rather than five, for example.Therefore, other options are available if you do not have a large down payment or would prefer not putting a large sum down on a vehicle initially. This can also be offered if you are simply refinancing your car for lower payments. Use our loan payment calculator to help find the best monthly payments and what size down payment is best for you.Cash RebatesDuring certain times of the year, many auto manufacturers and dealers offer cash rebates on specific vehicle models to boost sales. A cash rebate is a good way to put a down payment on a car without having to take money out of your pocket.Some dealers even offer discounts on new car leases as well, but they do not serve as cash on signing or a down payment. In those cases, the money often goes to the dealer who then applies the rebate as a lower down payment or a lower monthly payment on the lease.Some dealers will not tell you about the rebates but use them in the negotiating price that you may find out later at the signing so ask about them during price negotiating.Also, check to see if the car you are considering is eligible for tax credits for alternative fuel or electric vehicles.The tax incentives could easily pay back the money you use for your down payment, so it is like not having to lose the cash down payment you came up with.Financial Company BenefitsFinancial companies prefer down payments as it provides them with cash at the beginning of the loan so that if the buyer defaults, they still have money collected.A down payment also offsets the instant depreciation on a new car so that if there is an accident or if the buyer defaults, the finance company does not suffer as great of a loss. No money down car loans cost more.This is why many lenders offer lower interest rates to subprime credit buyers who provide higher down payments as it indicates a customer who is more likely to make payments regularly and on time than one who does not.

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