Would you like to get approved for a “0 down” car loan?
There are ways to get this done even if you have bad credit. Getting a car loan with no money down or “0 down” is very simple if you understand the reasons why dealerships ask for down payments and how to avoid having to have one. Too often people believe what they are told by finance managers and car dealers, when in fact, if you know just a few key points, you can avoid all of those hassles altogether.
Why would a car lot want a down payment?
Dealerships use down payments generally as a way of adding extra profit to the sale of a car. That’s why they’re usually something that are flexible. A car salesman may hit you up for a $3,000.00 down payment just to see how you react. They start you off high and to see how much you can come up with.
It’s a game!
When I was at my first dealership, I was trained to “prime” the customer for a down payment at the end of the test drive. The way that I was trained to ask the customer about a down payment was by saying, “Mr. Customer, what were you thinking about doing for an initial investment? $3,000.00 or $4,000.00?” The reaction from the customer was always abrupt and they were taken off guard by this question. What it did though, was “raise the bar” and after being asked about $3,000.00 or $4,000.00 down, it made the idea of $1,000.00 or $2,000.00 seem a lot lower. That was the only purpose for asking the question… It’s called “working a customer for cash”.
The more down payment that a car dealer can get you to agree to, the less money needs to be loaned on the car, which means that the dealer can make more money.
The reason they can make more money when you have a down payment is because the lenders only allow a maximum amount to be loaned on the car. If a dealer can max out the amount that the lender will loan PLUS get a down payment for you…
You’ve just been had. It’s sad but true, but that’s the way that some car dealers still work today. It’s an old school way of doing business, but sadly, it works.
So, how can you get a “0 down” car loan when you have bad credit?
You have to remember that there’s only two reasons that you would ever be asked for a down payment, even if you have absolutely horrible credit. The first reason is simply as illustrated above… the dealer wants to maximize profit on the sale and tries to convince you that you have to have money down. The second reason is that the dealer has too much money in the car and the lender won’t advance the amount needed to match the sale price. Getting a good deal on a car certainly helps.
Different lenders have different guidelines and there are good lenders that will advance the full amount needed for you to buy a good vehicle with bad credit. 0 down is commonplace with these types of lenders. There are good lending networks online that will allow you to find lenders that will approve you based on your individual credit history. This makes getting approved, and getting approved for 0 down car financing very easy. The best part is that all you have to do is provide your basic information and don’t have to go through a long credit interview process and it’s all in the comfort of the chair that you’re sitting in now.
There are benefits of putting money down.
Down payments are not evil. They should not however, be a part of the negotiation process of buying a car. Even when you do have a down payment that you want to use to lower the amount financed, which lowers your payments, you should always negotiate the sale price and interest rates based upon having 0 down.
Don’t ever tell a car dealer that you have a down payment until after you’ve agreed on the price of the car!
That is CRITICAL to getting a good deal, regardless of credit. It will however, make it easier to qualify for a car loan to have atleast the amount of your first payment to put down. It’s just shows good faith in your intentions to pay the loan.