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Can You Get a Car Loan without a Down Payment?

Yes, you can get an auto loan without a down payment, if you have good credit. Anything less than a near stellar credit history and your chances of being approved dramatically decline. While getting the loan is possible, you should question the wisdom of doing so for several reasons. Chief among those reasons is being immediately upside down on your loan.

The Risk of Depreciation

If you buy a new car, it is going to depreciate by at least 40 percent during the life of your loan. What happens if you are involved in an accident? Unless you have purchased gap insurance, you could be without your car and still owe money on the loan after any insurance settlement. With an outstanding balance that is now unsecured, your lender may demand immediate payment in full or decline to finance another vehicle and add that balance to the new loan.

Your best option when buying a new or used vehicle is to put at least 20 percent down. A down payment in that neighborhood improves your chances of being approved for a loan and, in many cases, prevents you from going upside down on the loan. It also gives you a better chance of having positive equity in your vehicle if you want to trade it before the loan is paid in full.

Trade Equity and Rebates

Do you have a used vehicle you’d like to trade in?  Most dealers will also consider trade equity as a form of down payment.  In this way, you may be able to get approved for a loan with no money down, even though the lender did stipulate a down payment in the form of cash or trade. Additionally, when purchasing a brand new vehicle, you can sometimes use the cash rebate in a similar manner.

In order to discuss your options with a vehicle finance expert, we invite you to submit your application – it’s fast, easy, and there is no charge. 

About the Author

The author has many years of experience in automotive finance and insurance. However, each consumer's situation is unique. It is best to contact a finance specialist for further assistance.
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