No deposit car finance
When you’re looking online for a new set of wheels, you might come across 0 deposit as an option for a down payment on a car. Here we’ll explore what no deposit finance is and find out how it works.
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What is 0 deposit car finance?
No deposit – or zero deposit – car finance refers to a financing option where you can purchase a car without making an upfront deposit or down payment. Traditionally, when you buy a car through finance, you are required to provide a certain amount of money as a down payment, typically a percentage of the car's total cost.
With no deposit car finance, you can finance the entire purchase price of the vehicle without making any initial payment. The lender will include the deposit in the total amount financed. This makes it a great option if you need a car at short notice or if you’d find it hard to pay a large deposit.
How does no deposit car finance work?
No deposit car finance works by allowing you to purchase a car without making an upfront payment or down payment. Here's how the process typically works:
Application – You begin by applying for a no deposit car finance arrangement through a car dealership or a financial institution that offers these kinds of financing options. You’ll need to provide personal and financial information, including your income, employment details, and credit history.
Approval and credit check – The lender assesses your application and performs a credit check to evaluate your creditworthiness. They will review factors such as your credit score, income stability, and existing financial obligations.
Loan offer – If your application is approved, the lender will provide you with a loan offer outlining the terms and conditions of the financing arrangement. This includes the loan amount, interest rate, repayment period, and any additional fees or charges.
Monthly payments – With a no deposit car finance arrangement, you will typically repay the loan amount including the deposit in monthly instalments over a fixed period, often ranging from one to five years. The repayment amount includes both the principal amount and the interest charged.
How can I apply for no deposit car finance?
In general lenders are more likely to approve your no deposit finance application if you have a good credit score. Here at Oodle, if you're eligible for car finance then you're eligible for zero deposit car finance. As no deposit finance deals tend to have higher monthly payments, lenders will need to check how reliable you are at making these monthly instalments.
If you’re hoping to get no deposit car finance it may be worth taking a look at our tips on how to improve your credit score before applying. Other requirements for a successful no deposit finance application include:
Being over 18
Being able to provide basic personal details, such as your name, age, and address
Being able to afford the monthly payments
Providing details of your income, so that lenders can view your credit history
To find out whether you are eligible for no deposit finance with Oodle you can start your finance application online here. As part of this process we will carry out a soft credit check to understand how much we can lend you and under what terms.
Considerations for no deposit options
As with any type of car finance, it’s best to weigh up your options first to understand whether this particular type of finance suits your own personal circumstances – there is no one-size fits all answer.
Pros
If you choose a car finance deal without an initial deposit, you can take the keys and drive without having paid anything other than a reservation fee (depending where you’re getting your new car from).
This means you could get your new car more quickly, as you wouldn’t need to save up or use money you’ve set aside for a rainy day.
Cons
If you don’t pay a deposit, the cost of your finance agreement becomes greater.
This could increase your monthly payments or make your agreement period longer, meaning you may need to pay more in total across the duration of your loan.