Can I Get a Car With No Down Payment?

If you get a car with no down payment, your interest rates will be around 12-22% and you might end up owing more than your car is worth. Here's what you need to know about cars with no down payment.
Written by Jacoba Bood
Reviewed by Jessica Barrett
Purchasing a car without a down payment isn’t ideal, as you'll face steep interest rates. However, it can be done.
Sometimes you don’t have the cash to put a down payment on a car, but you still need to buy one. That’s why insurance comparison shopping app
has put together some helpful tips to help you score better financing options on your
car loan

Getting a car with no down payment

It is possible to get a car with no downpayment, but the added costs may not be worth it.
The sticker price isn’t the only thing you’ll pay when you
buy a car
. There are also relevant state taxes,
fees, and dealership fees. Making a down payment will help cover these added costs so that you don’t pay interest on them by lumping them into your loan.
If you do need to buy a car with no down payment, you can expect to pay exorbitant interest rates on your loan—often in the range of 12–22%. And since the car value depreciates quickly, you will likely be left
upside down
, owing more than your car is worth. This will make it difficult to renegotiate or refinance your loan in the future.
Key Takeaway Purchasing a car with no down payment often ends up being more costly in the long term.
If you absolutely need to buy a car and have no money to put down, here are some helpful suggestions on how to get a car with no down payment to help you land a better deal on your financing.

How to get a car with no down payment

When you're ready to talk with a dealership about buying a car with no down payment, you'll head to the dealership and discuss the financing options and paperwork. There are some things you should take care of first to ensure you get the best deal possible.

Boost your credit score

In most cases, your interest rate will be determined based on your credit score. If you can’t swing the down payment, having a solid credit score will increase your chances of securing more favorable terms on your financing.
Shoot for a score of at least 680 or higher before you apply for financing. With decent credit, your lender is more likely to consider letting your down payment slide without jacking up the interest. Proving that you have a stable income and have lived at the same address for at least a year before applying can also help.
You can improve your credit by keeping borrowing debts below 25% of your total credit limit and paying your bills on time. It’s also important to ensure your report is accurate and to dispute any errors. You can access your credit report for free from each of the three major credit reporting bureaus once every 12 months or use a credit-monitoring app like
Credit Karma
to track your score continually.
Key Takeaway Improving your credit will help you get a better interest rate on your car loan.

Seek out a cosigner

If you have bad credit, finding a cosigner with good credit can help you get a better loan.
If your credit score is below 669, you’ll likely end up with a higher interest rate if you skip the down payment. If your credit is below 580, you might struggle to find any lender who will accept your application with no money down.
In this case, you may want to ask a friend or family member with good credit to cosign your car loan. Having a cosigner can help you get a loan even if you can’t make a down payment—but in most cases, your interest rate will still be calculated in relation to a median interest range.
Cosigning a loan is a big responsibility. The cosigner will be on the hook if you fall behind, so make sure you’re confident that you can keep up with your payments.
Key Takeaway Getting a cosigner may help you get a car with no down payment, but it won’t necessarily land you a better interest rate.

Shop around for the best deal

Doing your homework can pay off if you want to land the best rate with no money down. Down payment or not, you should always show up to the dealership with at least one loan pre-approval on hand.
Research current car loan rates and use online loan calculators to get a better idea of the monthly payment schedule you can afford. From there, getting pre-approval from a handful of lenders will help you avoid unnecessary dings on your credit report.
Be sure to explore various borrowing options, including banks, credit unions, dealerships, and alternative lenders. Seek out lenders that offer reasonable interest rates even with no down payment.
If you get preapproved for a reasonable rate, show it to your dealer when you negotiate your sale. Dealerships are highly motivated to sell loans and might just rise to the challenge of offering a better rate, even with no money down.
Key Takeaway Shopping around for a loan will increase your chances of securing more favorable terms.

Save for a small down payment

Even if you don’t have the recommended 20% to put down, a small down payment can help cut long-term expenses.
2019 analysis by Edmunds
found that the average car down payment rate is just 11.7%. Even a small down payment can help prevent you from ending upside down on a not-so-great loan.
Taking time to save up and improve your credit can help you save a lot of money in the long term. Using
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Should I buy a car with no down payment?

It's best to buy a car with a decent down payment to make sure you don't get stuck in a bad loan deal. However, if you can't afford a decent down payment, even a small one will help.
You can also buy a car with no down payment and still get a decent deal by getting preapproved for a car loan with a cosigner, improving your credit score, and shopping for the best car loan.

Can I buy a used car with no down payment?

Yes, you can buy a used car with no down payment. In fact, if you can't afford to pay a down payment, getting a used car might be the right option for you. You'll be asking a lender for less money than you would be if you were buying a new car with no down payment.
If you end up with a bad loan deal, you'll end up owing less in the long term with a used car than a new car.
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