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Buying a car with no down payment is possible through negotiation, trade-in value, or promotional offers. Lenders may forgo a down payment if the loan amount is less than the market value, and buyers with good credit can negotiate a no down payment loan. Leasing a car can also offer flexibility.
There is no down payment required to buy a car. Depending on individual credit history, trade-in value, or negotiated purchase price, the dealer and lender may be willing to secure a transaction with no down payment. Car leases and specials are additional ways to get a car with no money down.
One of the ways to buy a car with no down payment is to negotiate a purchase price that results in a loan balance that is less than the expected market resale value of the vehicle. Instead of just accepting the sticker price the dealer has on the vehicle, do your research beforehand. Check various websites and dealer sites to see what make and model year of the vehicle is on the market. A prospective buyer can also obtain purchase quotes from online vendors and look up the current expected sales value.
When the auto loan amount is less than market value, lenders are often willing to forgo a down payment because the loan will carry less risk. The amount of equity the buyer will accumulate will protect the lender in the event of a loan default. When negotiating a lower purchase price, it’s also important to make sure the buyer has an acceptable credit rating and debt-to-income ratio.
Car buyers who have an existing vehicle to trade in can avoid a down payment. If the trade-in value is worth enough to replace an acceptable down payment amount on the vehicle being purchased, the buyer can avoid spending money outright. Before going to a dealer, it is recommended that prospective buyers research the resale market value of their current vehicle.
During certain times of the year, auto dealers and lenders offer sales and promotional offers that give buyers the option to purchase new and used vehicles with zero down payment. Certain credit restrictions generally apply, as buyers are generally required to have a credit rating in the higher tier. Those with excellent credit can negotiate a no down payment loan during other times of the year. The best opportunity is at the end of the year when dealers try to sell off current year models to make room for next year’s incoming inventory.
While vehicle purchases are more likely to require a down payment, leases can give buyers the flexibility of getting a car with zero down payment. Known as a cost of capital reduction, upfront payments reduce the amount the buyer will end up paying each month. Leasing a car is only recommended for certain types of buyers, but it can be a way to increase or maintain cash on a monthly budget.
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