Zero Down Car Loans – Everything You Need to Know
When you are in the market looking for car loans, you would have come across variants with zero down. It is a type of car loan, where you don’t have to make any down payment to the lender. Generally, when you have to take a car loan from a lender, you have to pay a fraction of the amount as a down payment. They ask you to make the down payment, as it shows them that you will repay the loan.
Factors which determine qualification for zero down car loans
1. Credit score and history
If you have a good credit score, it becomes easy to get car loans from lenders. As a result, when you approach lenders, they will give you zero down car loans, as they know you will repay the amount within the stipulated time.
2. Amount borrowed
The amount you want to borrow from the lender also impacts whether you get a zero down loan. For example, if you ask $5,000 from the lender, you will get a zero down loan.
Tips to increase chances to qualify for zero down car loans
Reduce the amount of the loan
A great way to ensure you get a zero down car loan is to decrease the amount you want to borrow from the lender. For instance, if a vehicle is worth $7,000 in the market, you don’t have to borrow the entire amount. You can ask for a smaller amount, and pay the difference from your pocket. However, this strategy will work, only if you can save the right amount.
Trade-in your vehicle
Another technique you can use to increase the chances of getting a zero down car loan is that you can trade-in your current vehicle. Make sure the amount you have to pay for your current vehicle is lower than its value. Positive equity works in your favor, as it decreases the amount you have to borrow from the lender.
When you are getting a zero down car loan from a lender, make sure you go through the documents carefully. Also, always shop around, before you pick a lender who meets your requirements!