Editor's choice: Carvana
- Most credit types welcome
- 45-day preapproval
- Seven-day guarantee
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There are many lenders that offer zero-down car loans — but you might have to meet certain requirements to qualify.
Yes, you don’t necessarily need a down payment, but it will cost you more. Even a small down payment or a trade-in can help reduce how much you’ll pay. If not, you may end up with a higher interest rate — which means higher monthly payments and more money spent overall.
While the eligibility requirements for a zero-down car loan vary by lender, you generally need to meet the following criteria to qualify:
If you don’t have any money to make a down payment, these tips can help you save:
While it can be tempting to finance the entire cost, even a small down payment can save you hundreds of dollars in interest. This will help lower your monthly payment, and your lender may even charge you a lower APR. The recommended down payment is 20% — but many lenders accept down payments as small as 10%.
Without a down payment, you may end up owing more on your car than it’s worth. Avoid loss down the road by putting something up front.
Lenders may quote a higher interest rate when you don’t have a down payment. In addition, you’ll have to pay title and registration fees, sales tax and other loan fees. If you don’t have a down payment, these fees will be added on to your loan, which can make it easy to borrow more than your car is worth.
For example, a $20,000 car may end up costing $23,000 when all the dealership fees, registration costs, taxes and loan fees are accounted for. Without a down payment, you’ll need to finance 100% of the cost. And after you factor in depreciation — which will lower your car’s value whether you buy new or used — you could end up upside down on your car loan. It may mean less money up front, but you’ll likely end up paying more overall.
Lenders are less likely to offer car loans without a down payment because of the extra risk. You may not have been approved for a few reasons:
If you have good credit, a zero-down car loan could help you buy a car without needing to save up for a down payment. But don’t jump on the first loan you find. To get the best deal, compare your options first.
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