Financing with No Money Down – What You Need To Know
If you’ve been contacting auto dealerships around the Louisville, Kentucky area about auto financing with no down payment, you’ve probably been told it’s virtually impossible.
At the Oxmoor Auto Group Special Finance Center, our job is to assist you in obtaining financing you need and educate you on the best way to achieve an approval. The purpose of this page is to help explain the process of obtaining auto financing with no money down and answer potential questions borrowers may have.
First, let’s answer the main question:
Is it possible get auto financing with no down payment and bad credit?
HOWEVER, it is not common.
If you’d like to have us evaluate your down payment situation, please click on the banner below.
Why Financing with No Money Down is Uncommon
Next to a home mortgage, a car loan is the largest debt that most people will acquire in their lifetime. Special finance companies and banks specializing in bad credit assume a great deal of risk when they lend money to car buyers with poor credit histories. The primary way lenders judge a loan’s risk level is evaluating a borrower’s credit history.
Even when a borrower has exceptionally good credit, lending 100% of a vehicle’s value can still be very risky. If a borrower has no credit or low credit scores, the likelihood of a loan default significantly increases.
If a borrower misses too many loan payments, the lender will be forced to repossess the vehicle. Eventually, the finance company will sell the vehicle, at wholesale prices, to an auto dealer to recover some of their money.
Down payments lower the risk of default for both the lender and the borrower. By reducing the amount owed, special finance lenders can offer better loan terms and a more affordable monthly payment.
How To Achieve Financing with No Money Down
While there are limited number of lenders that offer financing with low credit scores and no down payment, it is possible. Factors that influence a borrower’s ability to achieve no money down financing are:
Previous Vehicle Payment History
Previous vehicle payment history is a strong factor in no money down approvals. If a lender sees late auto payments or a repossession, the chances of achieving an auto loan with no down payment is greatly reduced.
Low Credit Scores Due To Credit Reporting Errors
If a borrower has experienced a bankruptcy or been the victim of identity theft, credit reporting agencies may be reporting faulty information. Providing evidence that proves reported debts are the result of credit errors will greatly increase the possibility of no money down auto financing.
Vehicle Trade-In Equity
If a borrower owns an automobile that is paid off or owes less than the vehicle’s current loan balance, some special finance lenders may accept the vehicle’s equity in lieu of down payment money. Even if a vehicle does not run, it still has some value. For more information, fill out our quick Vehicle Trade-In Evaluation form.
Previous Relationship with the Lender
If a borrower has an established relationship with a particular lending institution and is approved for another loan, the company may be willing to waive any money requirement (provided that the borrower maintained an acceptable payment history).
Questions? Click the phone to speak with a Special Finance Advisor now!