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Getting a car can be a big financial decision, deposits are a common starting point in your car finance journey, but not everyone wants to start there.
There are many reasons why someone may not want to pay a deposit. This could be because of needing a car as soon as possible with no time to save, budget restrictions, or simply just because no deposit finance options exist.
It is possible to get no deposit car finance, but what do you need and how will it impact you in the long run? Understanding what no deposit means is important if you’re planning on applying for car finance without a deposit.
It has many benefits, particularly when it comes to electric vehicle expenses, and saving the deposit money can help you to afford other related items that can help you on your new car journey.
Typical car finance applications, where it’s a hire purchase or PCP purchase, start with a deposit which is around 10% of the vehicle price. You then continue with monthly payments until the end of your agreement.
With no deposit car finance, you do not pay a deposit but instead jump straight in with your monthly payments, this means the entire cost of the car is financed. The amount of your monthly payments will be agreed between you and the lender, so be sure that the agreed amount is within your budget.
For no deposit car finance lenders will look closely at your finances and credit file. For typical car finance applications, you need:
You will also be subject to a credit check, whether this will leave a mark or not is dependent on the stage of your application.
You will need all of these things for a no deposit application but be aware that lenders will examine your finances and credit score more vigorously so you should make sure these are in good standing before making an application.
No deposit car finance can make switching to an electric vehicle (EV) more affordable by removing the need for a large upfront payment, allowing drivers to spread the cost of the vehicle entirely through manageable monthly instalments.
This can be particularly beneficial for EV buyers, as electric cars can often be more expensive than their petrol or diesel counterparts.
The money saved from not paying a deposit can also help with other EV-related expenses, such as installing a home charging point.
Whilst no deposit car finance sounds great in theory, there are some things you should take into consideration.
Pros:
Cons:
You should consider whether these factors make applying for no deposit car finance worth it. You should also consider that, since lenders will examine your credit score and finances so closely, how likely it is for you to be declined, as it could leave a mark on your credit file which may impact your chances of finance in future.
Whether you should apply for no deposit car finance or not is dependent on how confident you are on approval and that you can afford the monthly payments.
No deposit car finance can be good for many people for different reasons, but it also has its cons and it’s important to take these into consideration when applying.
When you agree on your monthly payments with the lender you should make sure this is something you can fit into your monthly budget in order to prevent you from falling behind on payments, and you can figure out the monthly payments on https://www.carmoney.co.uk/car-finance/no-deposit-car-finance.
If you do fall behind this could leave a mark on your credit file and could even result in being taken to court by the finance company if you continuously miss payments.
However, no deposit car finance is possible and a good option for those who have a good credit score and can afford the monthly payments. It can help you to get on the road sooner and lets you keep any savings for future essentials or emergencies.
There are lenders who provide no deposit car finance, and these are the lenders that are likely to provide no deposit car finance to you, provided that you can show a good credit history and score, as well as a consistent income that is able to cover your payments.
