Whether you’re purchasing a new or used car, it’s likely to be expensive. Very few people have the cash available to fund the purchase of a vehicle in its entirety, in which case car finance is an ideal option. As such, you may be wondering, ‘Can I buy a used car with no down payment?’.

There are a number of different car finance options available, from hire purchase (HP) to personal contract purchase (PCP) and personal contract hire (PCH). The most common way to secure car financing without a down payment is via PCP, but it will depend on the provider of your car finance.

This article will look at ways to secure no-deposit car finance, what you can expect from such a deal, and any potential workarounds.

Can you buy a used car with no down payment?

There are ways to secure car finance with no deposit (or ‘down payment’). Whether or not this is available for you will depend on what kind of car finance you’re looking for. Similarly, whether no-deposit finance is most appropriate for you will depend on your personal circumstances.

When you purchase a used car, you’re buying a vehicle that’s value has already depreciated. Any deposit that you need to pay on it will therefore be smaller than it would be where you purchase a new car.

If you opt for no-deposit finance, then you can expect to pay the same amount of money by the end of your car finance terms as you would if you were to make a down payment. That said, the lower your deposit is, the higher your monthly repayments will be. In short, no-deposit finance will end up with you paying higher monthly repayments, which you need to be sure that you can make before entering into the finance deal.

You can also expect to be paying a higher rate of interest if you do not put down a deposit. As a result, you can end up repaying more than what the car was originally worth just through this hike in interest.

It’s also worth bearing in mind that if you are looking for no-deposit finance, your lender will likely only accept you if you have a high credit score. Because you aren’t fronting the money for a down payment, you’re considered higher risk. As such, your credit score will need to demonstrate that you have a track record of making your repayments in a timely and efficient manner. You’ll also likely have to pass affordability tests, which car finance providers conduct in order to ascertain whether or not a borrower is financially able to make their repayments.

As such, whilst it is possible to secure a used car with no down payment, if you can front the money for that deposit when you initially purchase the vehicle, this will lower both your monthly repayments and your interest costs. It can therefore be more beneficial for you in the long run.

Alternative ways to finance your car

There are things that you can do to try and finance your vehicle.

If you can shop around, this will put you in a better place to negotiate. Familiarise yourself with the kinds of terms that you can expect, so that you’re in the most informed position you can be. Similarly, if you shop around for a cheaper car, you won’t need as much for a deposit.

You could also consider asking someone to co-sign your loan. You and the co-signer would need to be aware of the potential risks in entering this agreement, but this might be a way to secure car finance without a down payment.

Alternatively, you could delay the purchase of the car until you have the cash to make the down payment. Any deposit is better than no deposit, and you’ll have likely improved your credit score over that saving period too, which will make you a more attractive candidate for finance in the first instance.

Find out more about used car finance

If you have questions about no-deposit car finance, or want to find out what other deals may be available, you can contact My Car Credit today, or use our car finance calculator to check what kind of terms you can expect.

Rates from 6.9% APR. Representative APR 13.9%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating

Excellent

  • You are a home owner
  • You have been on the electoral role for a long period of time
  • You have current credit arrangements and mortgage with no defaults
  • You have no CCJs, credit arrears or missed payments
  • You rarely apply for credit
  • You are employed or self-employed

Good

  • You are on the electoral role
  • You are a home owner or long standing tenant
  • You have a stable employment history
  • You have current credit arrangements with occasional missed payments
  • You have no CCJs

Fair

  • You are or have recently been on the electoral role
  • You may have recently changed address
  • You may have occasional missed payments
  • You may have an old CCJ
  • You may have regularly applied for credit

Poor

  • You may have had frequent changes in address
  • You may not be traceable on the voters roll
  • You may have exceeded credit card limits
  • You may have missed payments on current agreements
  • You may have had a CCJ in the past

Bad

  • You may not be traceable on the voters roll
  • Your credit cards are over their limits
  • You have recent CCJs
  • You may have been refused credit elsewhere
  • You may be in a debt management plan
£

X monthly repayments of
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*for illustration purposes only

No impact on your credit score

Representative Example

Borrowing £7,500 at a representative APR of 13.9%, annual interest rate (fixed) 13.85%, 47 monthly payments of £201.38 followed by 1 payment of £211.38 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £2,176.24, total amount payable is £9,676.24.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!