Zero Savings? = No Loan!
This is the modern day mantra of most lenders. They require you to make down payment of at least 10% before approving your car loan application. But, it is not possible for every car buyer to save money for down payment.
What are your options when you have zero savings for making down payment?
It is okay if you have no cash or savings for making down payment. Here are a few options that can help you in your times of distress:
1. Trade-in or Sell your Car
If you have a car with equity in it, you can use it to reduce the loan amount of your new car. But, before you trade-in your old car, it is important to ascertain its selling price. If you can manage to get a higher selling price than the trade-in value offered by the dealer, it is profitable to sell your car. You can use the proceeds from the sale towards making down payment.
2. Manufacturers Incentives
Usually, manufacturers provide handsome cash incentives on new car models. You can select the car model with the highest incentive and use it to make down payment.
3. Zero Down Payment Auto Loans
Other than the above-mentioned options, there is one non-traditional alternative that doesn't require any car or incentive. The zero down payment auto loan program is a great option for the following people:
(1) Car buyers without any car to trade-in
(2) Used car buyers
(3) Buyers who have chosen new cars without cash incentives
Who can apply for Zero Down Payment Auto Loans?
The eligibility criteria for the loan program are uncomplicated. Anyone above 18 years of age and a valid SSN can apply. To obtain zero down payment auto loans, you must fulfill common lending requirements such as:
>> Stable employment
>> Regular income
>> No repossession in last one year
>> No open bankruptcy
>> Regular payment of utility bills
>> Lower debt-to-income ratio
Usually, lenders that provide zero down payment auto loans require your gross monthly income to be higher than $2,000. It is because the loan program is slightly expensive than the traditional auto loan programs.
Where can I apply for the Loan Program?
You will not be able to obtain zero down auto loans at traditional financial institutions like banks and credit unions. However, there are many auto dealers and online auto financing companies that believe in undertaking higher risks. Such dealerships and companies can help you with your loan application.
