If you're in the market for a new vehicle but the thought of having to save for a sizeable deposit is holding you back, there's good news. You don't always need a deposit to get car finance. Rapid Finance, one of Australia's most reputable brokers, can help you obtain a car loan without the need for a hefty upfront deposit.
What Does "No Deposit" Really Mean?
A no deposit car loan is exactly what it sounds like: a loan for the full purchase price of a car without requiring an upfront deposit. These loans are beneficial for people who need a vehicle quickly but don't have readily available cash for a deposit. Instead of putting down a lump sum, the cost of the car is spread over a series of monthly payments.
However, securing such a loan isn't always straightforward, as most lenders require some form of deposit to reduce their risk. That's where Rapid Finance comes in. As a trusted broker with a broad panel of partner lenders, we can help find those who are willing to approve applications without a deposit, giving you a higher chance of getting the car you want sooner.
The Loan to Value Ratio (LVR)
Before agreeing to forward funds to their client for the purpose of purchasing a vehicle, a lender will value the asset (i.e. the car or motorbike that their client has chosen to purchase). They will then lend the customer a certain percentage of that asset’s value.
This is called the Loan to Value Ratio, or LVR.
The LVR is calculated by dividing the loan amount by the book value of the vehicle, and showing it as a percentage. For example:
A loan applicant is looking to purchase a vehicle that has a book value of $20,000. The price of the car is $18,000, and the client has also chosen to purchase an extended warranty valued at $2,000. If the total borrow amount is $20,000 – the full book value of the vehicle – then the LVR will be 100%.
The amount of LVR lenders are willing to finance for a car or motorbike loan varies from lender to lender. While some may only lend 100%, other lenders may be happy to fund 150% or even 180% of the vehicle’s value. Provided the amount you wish to borrow is under your lender’s LVR guidelines, it can often be that you will not have to pay a deposit.
Read more on Loan to Value Ratios.
How Rapid Finance Can Assist You
At Rapid Finance, we recognise that everyone's circumstances are unique. That's why we tailor our approach to suit your needs and requirements. We assess your financial situation, your affordability, and your credit profile to match you with suitable financing options from our wide panel of partner lenders.
Our online application process is straightforward and fast. Simply apply online, and we'll get back to you with options that match your circumstances. All vehicle types are considered from cars, motorbikes, caravans to jet skis!
What Are the Benefits of a No Deposit Car Loan?
- Immediate Ownership: With no deposit car finance, you can take ownership of your vehicle immediately without having to wait until you have saved up for a deposit.
- Improved Cash Flow: Not having to put down a significant amount of money upfront, helps maintain your cash flow, freeing up funds for other necessities or emergencies.
- Flexible Payment Plans: Loans can be structured to suit your income and budget, with fixed monthly repayments that make it easier for you to plan your finances.
- Range of Choices: Whether you want a new car or a used one, our panel of lenders caters for all types of vehicle finance, ensuring you have a wide variety to choose from.
Things to Consider
While no deposit car loans offer many advantages, there are a few factors to consider. These loans can come with higher interest rates as they represent a greater risk to the lender. As such, it's essential to ensure that the repayments are within your budget to avoid any financial stress down the line.
Additionally, you should consider the total cost of the loan. While no deposit options mean less cash upfront, they can lead to higher total costs over the life of the loan due to interest payments.
The Advantages of Having a Deposit
While obtaining car finance without a deposit is possible and can be convenient, it's important to understand the potential advantages of having a deposit:
- Lower Interest Rates: Lenders often view borrowers who can provide a deposit as less risky. This could result in you being offered a lower interest rate, which means paying less over the term of your loan.
- Reduced Monthly Payments: A deposit reduces the principal amount you need to borrow, which can lower your monthly repayments. This can be beneficial if you're working within a strict monthly budget.
- Increased Loan Approval Chances: If your credit history is bad, a deposit can help to offset the lender's risk and may increase your chances of loan approval. Check out our bad credit car loans to get started.
- Equity in Your Vehicle: If you pay a deposit, you'll have instant equity in your car. This means you're less likely to end up in a negative equity situation, where you owe more on the loan than the car is worth.
- Shorter Loan Term: A deposit can also reduce the term of your loan, meaning you'll own your car outright sooner.
These advantages show that while no-deposit car loans are an excellent solution for many people, if you can afford to put down a deposit, it's definitely worth considering. With Rapid Finance, we can guide you through the different scenarios to ensure you make the most informed decision based on your specific circumstances.
Obtaining car finance without a deposit is an achievable goal, and Rapid Finance is here to guide you through the process. Our team of experts and our extensive network of partner lenders enable us to find suitable options based on your affordability and credit profile.
Remember, the most important factor is not the absence of a deposit, but the affordability of your repayments. With Rapid Finance, you can confidently make that car purchase and enjoy the freedom that comes with owning your vehicle.