no deposit car finance Archives

Can I Buy a Used Car with No Down Payment?

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 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 12.4%, annual interest rate (fixed) 12.36%, 47 monthly payments of £196.44 followed by 1 payment of £206.44 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,939.12, total amount payable is £9,439.12.

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.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

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!

or call 01246 458 810

Can I Buy a Car with No Deposit?

man driving a car he has bought on finance with no deposit on

We all know that cars can be expensive. Aside from a house, it is probably the biggest purchase you’ll make in your life, especially if you buy a new motor. And while the vast majority of people opt for second-hand vehicles – 6,752,959 were sold in 2020 – it still means splashing out a significant chunk of change.

One way to make the costs lower is to put down a large deposit, even if you opt for car financing to make the monthly premiums more affordable. The truth is, though, that you don’t need a deposit to become the proud new owner of a car.

The main two types of car financing

By now, most people are familiar with the broad concept of car financing. After all, the vast majority of vehicle sales are leveraged with the help of hire purchase (HP) or personal contract purchase (PCP) deals.

Although the two forms of financing are similar, they do have their differences – and it’s essential to understand them before proceeding. For instance, HP is where you pay back the loan and own the vehicle at the end of the contract. PCP, on the other hand, involves having to return the car, finding a new PCP deal, or purchasing the car outright.

Both typically involve deposits, however, so how do you buy your dream motor if you don’t have a couple of grand lying around?

No deposit car finance

Even with the affordability of car finance, the deposit alone can price out many buyers. The good news is you can drive away without having to save up to 10% of the total amount. For people with small budgets, it’s an ideal compromise.

However, it’s worth pointing out the caveats that exist. Firstly, the monthly repayments are greater as there isn’t a deposit to reduce your premiums. That means you’ll pay more in the long term due to the interest rate. Still, it may be better for you to do this than wait for years to accumulate a deposit. Even then, the monthly fee may not be that much cheaper.

Fortunately, there are now plenty of car finance deals available – both HP and PCP – where a deposit is not necessary. Just bear in mind, with a PCP, a balloon payment will be needed to pay for the car outright. But, if you’re prepared, you can try and save up over the contract period while driving around in a fantastic vehicle.

How do you qualify?

Is it hard to get accepted for car finance? Well, not everyone is eligible to buy a car with no deposit as providers take certain features into consideration. Thankfully, My Car Credit has several tools you can use that highlight your probability of being accepted.

To learn about them, and to find answers to more of your questions, please contact us right away. We want to hear from you!

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

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Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 12.4%, annual interest rate (fixed) 12.36%, 47 monthly payments of £196.44 followed by 1 payment of £206.44 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,939.12, total amount payable is £9,439.12.

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.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

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!

or call 01246 458 810

car buying Jan24 no deposit car finance

No Deposit Car Finance – How Does it Work?

New car bought with no deposit car finance

You’ve fallen in love with the perfect dream car, it’s ready to go and you’re raring to drive it straight off the forecourt. Only one problem remains – paying for your new wheels.

Car finance offers the perfect solution for buying the car of your dreams without needing to use your savings and pay in one go. You get the option to pay your car off in manageable monthly payments, over a period of your choice.

However, some people do worry about needing to find a deposit. This is typically a large chunk of the overall payment and if you do not have a car to trade in, it can be unaffordable for some.

Luckily, you can now get car finance without having to pay an initial deposit. Read on to discover how this works and whether you could get no deposit car finance.

The types of car financing

Car financing is a very common method used when buying a car. For the majority of us out there, paying for a car outright is unrealistic, especially if you’re looking to get a new vehicle. Car financing gives you the option to pay off the cost of your car monthly, rather than paying the cost in one go. There are a few different types of car financing available that you can choose from, with the main two being hire purchase and personal contract purchase:

Hire purchase (HP)

Hire purchase is one of the most popular car financing methods. You can either set up an HP deal with your car dealer directly or with a third party broker or lender. Generally, you may get a better deal with an external company than the car dealership so it’s good practice to shop around.

With many car finance options, a deposit of around 10% of the purchase price is required to secure the financing – we’ll get to the zero deposit options later in the article.

HP contracts can last anywhere between two and five years, with monthly payments, plus interest, paying off the value of the car. Once your contract is up and you have completed all your payments, the car is yours. You may have to pay a final payment that is higher than your monthly cost to secure the vehicle, but this will be agreed when buying the car so there will be no hidden surprises.

So, once your contract has come to an end and all payments have been made, you are then the owner of the car and can do with it whatever you please.

Personal contract purchase (PCP)

A personal contract purchase (PCP) is similar to a hire purchase in many ways. The car is paid off in monthly installments rather than one lump sum. You have the option of paying a deposit, which does reduce your monthly payments and overall interest. Despite their similarities, there is one clear difference between HP and PCP car financing deals.

With a HP agreement, you are paying off the full value of the car each month and so at the end of the agreement, you own the vehicle. However, with a PCP agreement, you are only paying off the depreciation of the car each month, rather than the full value.

So, you are essentially paying the difference between the car’s value when you purchase it and the estimated value of the car at the end of the agreement. In essence, you are renting the car from the dealership for a set number of years. At the end of the contract, you can make a choice between paying a lump sum to keep the car, trading in the vehicle for a newer model or returning the car entirely to the dealer.

No deposit car finance

So, now we’ve covered the two most popular forms of car financing, it’s time to take a closer look at how you can secure a car finance deal without having to fork out the initial deposit. It sounds too good to be true, right? Driving away in your dream car without having to pay a penny upfront. But it is in fact a reality.

Due to the huge competition out there when it comes to car financing options, from car dealerships to independent companies, there are a number of deals now available to allow companies to stand out from the crowd.

Typically, the best no deposit car finance deals are found from third party companies. This includes car finance price comparison websites such as Confused.com, which compare the best deals from across the market.

Alternatively, car finance brokers such as My Car Credit will offer you a broader panel of lenders who cover all credit profiles, from excellent through to bad.

No deposit car finance is available from most of My Car Credit’s lender panel. This means if you find a car worth £7500, a lender from My Car Credit would pay for the vehicle from the dealership and offer you a repayment plan over your chosen term, leaving you with nothing to pay upfront.

Secure the best deal

If you’re looking for a new car and want to know your budget or perhaps you’ve found your dream vehicle and are wanting to get driving as soon as possible, the no deposit car financing deals from My Car Credit can get you on the road in no time. We have a number of options available to suit you, no matter your circumstances.

Get a car finance quote today using our quick and easy calculator. You can then apply online and get an instant, online decision on car finance. If you need any help, feel free to get in touch with our friendly team to see how we can help you drive away in your new car.

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

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Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 12.4%, annual interest rate (fixed) 12.36%, 47 monthly payments of £196.44 followed by 1 payment of £206.44 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,939.12, total amount payable is £9,439.12.

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.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

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!

or call 01246 458 810

deposit hp Jan24 no deposit car finance PCP

Can I Buy a Used Car with No Down Payment?

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?’.