The basics of securing a no deposit car loan
To get a car loan without a deposit, also known as 100% car finance, you need to get your finances in order. As you don't have an upfront cash deposit, you need to show your financial stability in other ways.
You can do this by demonstrating:
- A clean credit history
- Proof of income
- Stable employment
- Stable residence
Simply put, lenders are always looking to minimise their risk. Without a deposit, the perceived risk is higher, so you need to compensate for that with a great financial profile.
Give yourself the best chance of no deposit car loan success with these three tips.
1. Check your credit score first
You can check your credit score online for free. It only takes a couple of minutes and it'll let you know where you stand credit-wise.
Ideally, to apply, you want a credit score of:
- Excellent (833-1200)
- Very good (726-832)
- Good (622-725)
It is possible, in some cases, to get a no deposit car loan with bad credit, that is to say, a score of Average (510-621) or Below Average (0-509). However, it is generally more difficult.
2. Get the paperwork together
You'll need evidence to show your financial stability. This may sound intimidating, but it shouldn't. All you need is some basic details about you and your situation.
- Payslips and other proofs of income
- Clean bank statements (minimum dishonours)
- Evidence of stable residence, such as a rental agreement
- 100 points of identification
The more you have prepared and ready-to-go, the smoother your application process will be. So, it pays to think ahead and to get everything sorted now.
3. Use a car finance broker
A car finance broker is a specialist in car loans. They'll help you to put your best foot forward and will give you the best chance of loan success. They do this in a variety of ways.
A broker can:
- Help you to prepare your case for finance
- Compare a range of lenders and loan products
- Negotiate with lenders on your behalf
- Seek out options of which you may not be aware
Even if you've never used a car finance broker before, it's worth giving one a call for a chat. You may be surprised by the number of finance options available to you.
Getting a no deposit car loan with bad credit
You'll notice that this article is predominantly about demonstrating a good credit history. So, you may assume that it is not possible to get a no deposit car loan with bad credit.
Well, the truth is, maybe, you may be able to get a car loan without a deposit and with bad credit. However, it will depend on your situation.
It will most likely come down to a number of factors, such as the type and number of defaults on your credit history, or if you're able to find a loan co-signer with a good credit history.
About the author
At Rapid Finance, we are your specialists in car loans. Whether you're looking for a secured car loan, personal loan, or no deposit car loan with bad credit, we may be able to help.
Apply with us and we'll compare a range of lenders and loan products to seek out a solution that matches your needs, budget and circumstances.