5 Times to Consider a No-Money-Down Auto Loan

Consumers are often wary of “no money down” offers. Like many advertising terms, it can sometimes be more hype than substance, and there can be drawbacks. But there are times where it’s worth taking someone up on the offer, like these five situations.

You Can’t Get Together A Down Payment

Simply put, the appeal of “no money down” is that you don’t need to have a down payment in your bank account waiting to be signed over. Certainly it’s better if you have a down payment set to go for your new car, but not all of us have enough room in our budgets to put together ten to twenty percent of the price of a new car. So, if you’re not going to have a down payment, no matter what, then it makes sense to take a no-money-down offer.

You Need A Car Immediately

The reality for many of us is that we need our cars. They get us to work, they help us get the kids to school, they’re crucial for getting to the grocery store to put food on the table, and other people may be relying on your ability to get them around, from elderly family members who need to go to doctor’s appointments to friends you may be helping get to and from work. For many of us, if a car decides to go off the road for good, it can cause an entire cascade of bad news, and if that’s you, a no-money-down deal makes sense.

You Can Get ‘Caught Up’

If you can’t put together a down payment quickly, but you do have more room in your budget for a car payment, a no-money-down deal can make financial sense if you can get “caught up,” that is, if you can overpay your loan every month to ensure that it works out to the same financially as putting down a down payment. Check to ensure that you’re allowed to overpay your loan, but if you can, and it makes sense, then you can accept the terms with confidence.

It Offers You The Best Terms

No-money-down loans are often frowned on by financial types as they usually require you to borrow more money, which means you pay more in interest. But in some cases, if you accept a no-money-down loan, the terms will be so generous, with much lower interest rates and a reasonable term, that it actually makes more sense financially to accept it. This can be rare depending on your situation, but if the math works out in your favor, then you should take advantage of it.

The Loan Amount Is Low Enough That It Doesn’t Matter

Realistically, not every car loan is for a luxury vehicle. If you just need four wheels and an engine, and are buying a car for a modest price, honestly a no-money-down deal won’t make any difference in quite a few cases.Especially with no money down loans, always do the math and understand exactly what you’re committing to. Know what you’re paying in interest, what you’re borrowing to pay for the car including fees and taxes, and how much you’ll need to pay it off. But if the math makes sense for your budget, then a no-money-down loan should be something you consider.

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