Scraping together the funds for a car deposit is no easy feat, what with all of life’s other expenses we need to take care of. Fortunately, many financiers these days are open to no deposit car loans, which is sure to make things a lot easier for those in a tight spot. So, before you worry yourself into a headache, take heed of these points to understand exactly what a no deposit car loan means for you.
You will be borrowing more money
When you take out a no deposit car loan, you are asking the lender to provide you with a larger loan. Therefore, you will be borrowing more money from the financier. From their perspective, they will want to run the numbers against their risk tolerance, which will be measured through the Loan-to-Value ratio of the car. If this equation stretches their thresholds, your car loan application is unlikely to proceed, however, even if it does get the tick of approval, you’ll need to remain conscious of how a no deposit car loan inflates your repayments and interest costs.
Eligibility requirements are crucial
Like all forms of financing, there are strict eligibility requirements you need to pay attention to in order to increase your likelihood of obtaining a loan. While some of these criterion concern your identity and personal circumstances, the car in question is also an important point. Should you be interested in a car that is 10 years old or thereabouts, it is likely you will find a hard time to attain a no deposit car loan since the vehicle may have little resale value in the future should you fall behind on your obligations.
The type of loan you’re signing up for
While it may seem like an opportune prospect to take out a no deposit car loan, do bear in mind that this type of loan is considered a secured personal loan. If you haven’t come across this term before, it means that you are providing some form of security in order to back the loan. More often than not, this will be the car being purchased. It also means that should you be unable to make repayments, the financier is afforded some protection by having the right to repossess the car.
Are you signing up for the best deal?
No deposit car loans provide you an advantage as far as avoiding the need for up-front capital. However, with that comes the trade-off that your loan may be burdened with a higher than normal interest rate. As a result, this may leave you in a position where your future repayments are going to be more than they otherwise would if you were able to reduce the loan value. On top of that, you should also inspect the terms offered to you to assess fees like covering loan establishment, late payment and ongoing costs.
The Fincar team is here to help you with all your financing needs. Contact us today to help arrange your next car or equipment loan.