Buying a Car Without a Down Payment

So you need to buy a car, but you lack the funds for the down payment? This is a tough situation and to make it more difficult, your credit isn’t the best. It may seem the only thing you can do is pay a high interest rate – the rate you want to avoid. But wait…there’s hope – there may be another option.

The Smallest of  Down Payments 
In the past it was standard to put down 20% on a vehicle; these days many dealerships will take half that and sometimes, even less. If you can put down anything it will help lower your payment. However, if even the smallest down payment isn’t doable for you, there are car dealers and finance companies that will fully finance your loan at over 100%, to account for fees, but as you may have guessed, it’s going to cost you more every month at the highest interest rate.

If you can wait a few months to make your purchase and save for a modest down payment, the wait will literally pay off. Also during this time, strive to pay all bills on time and correct any potential issues on your credit report. A cleaner credit report should reduce your interest rate and therefore your monthly payment.

Do Your Homework 
Don’t be afraid to negotiate. If you have a deal in mind, you won’t get it if you don’t ask. Talk to dealerships, not only about the price of the car, but also about financing options. Again, you never know what they can do until you ask. Do your research – there are online tools that will prepare you before you visit a dealership or reach out to banks, credit unions and specialty finance companies. Take a few minutes and check out a Payment Calculator, Car Loan Calculator, and Income Calculator. You may find an online lender, like or, that can help you regardless of your credit or down payment situation and applying online is easy. Get familiar with the range of interest rates so you get the best deal. Don’t pay more than you should!