If you are in the market for a new car, you may be wondering ‘Do I need a car loan deposit, or can I get a car loan without one’? Read on to find out.
If you are in need of a newer and safer vehicle, but are strapped for cash, you may be wondering if you need a deposit to get a car loan. The short answer to that question is no, not necessarily, but let’s break it down to see what your options are.
Getting started with car loans
A car is a high-value item that can cost many thousands of dollars. Not many of us have the money set aside to buy one outright, borrowing money is often the only way to go, regardless of whether you buy a new or used car.
What is a car loan deposit?
A car loan deposit is a lump sum contribution that you make towards the purchase price upfront. You may either have a deposit saved, or you might look to use the money from performing a trade-in on your current car. Either way, making a car deposit, whether at the dealer or to your lender, can help you own your new wheels sooner!
Selecting your car
Before you can know your loan amount, you’ll need to know the purchase price of the car you wish to buy. It’s not always possible to get enough finance for your dream car, however, a new vehicle purchase is still an incredibly exciting time — so make sure you do your due diligence in selecting your vehicle.
Your loan amount
A step before looking at your car finance option, you’ll need to know the loan amount that you’ll be looking to borrow. For secured car loans, you can only lend the value of the car, and can’t take out any additional funds.
If you’re looking at unsecured loans, you may be able to build in the entire value of the purchase and take a loan amount to cover the total cost of buying a new car. For example, any on-road costs or even the first year of your comprehensive car insurance policy.
Whether you’ll be able to access an unsecured car loan depends on your personal financial situation.
Bad credit?
Work with experienced finance specialists who look past your history and can offer you the finance you need to get the wheels you want.
Apply Online NowNo deposit car loans are available
Unlike other loans, such as a home loan, it is not mandatory to make a car loan deposit. However, making a down payment towards your car loan can have many benefits.
- You will have more flexibility with your loan to value ratio.
What is a loan-to-value ratio (LVR)?
If a buyer borrows the full vehicle amount under a loan, that is considered to be a 100% LVR. The maximum percentage that can be borrowed depends on the lender.
Your no-deposit car loan options
Whether you’re buying a new or used car, you’ll generally have two no-deposit car loan options available to you:
- Secured no-deposit car loans: A secured no-deposit car loan uses the car itself as a form of collateral to secure the loan. This means that the car loan lender will take an interest in the car and use it for security in case you ever default on your loan and are unable to meet your loan repayments. For this reason, a secured no-deposit car loan will generally come with lower interest rates than other forms of vehicle financing.
- Unsecured no deposit car loans: An unsecured no-deposit car loan on the other hand, does not use the car as a form of security. This means that the lender cannot repossess your car straight away if you default on your loan, however unsecured no-deposit car loans do generally come with a higher interest rate than a secured no-deposit car loan.
Why car loan deposits are a good idea if you have bad credit
Car loan deposits can be beneficial for borrowers with a bad credit history, as it means they need to borrow less money, which could help them get approved. Willingly making a larger deposit can also show financial diligence and responsibility, as well as a willingness to work with your lender.
Importantly, a lower loan amount can mean accessing a more competitive rate.
FAQs about no deposit car loans
Are there extra fees with a no-deposit car loan?
No-deposit car loans are not a separate form of vehicle finance, and simply represent the range of car loan products on the market that don’t require a deposit. Therefore, the fees that apply to your car loan will depend on the lender — different lenders charge different fees for their car loan products.
Are no deposit car loans available for self-employed people?
Most lenders have a more strict approval process when processing loan applications for self-employed people or casual workers. Centrelink recipients also find it challenging to access loans. Finance One have a proven track record at providing self-employed people, those with seasonal income, or who receive Centrelink benefits, with car finance.
What is the interest rate on no-deposit car finance?
The interest rate for a no-deposit car loan will vary, depending on the market interest rates, whether the loan has a variable or fixed rate, and your individual circumstances.
How can I get a car loan pre-approval?
You can either talk to the team at Finance One or apply now to start the process of gaining a car loan pre-approval.
Who offers bad credit car loans?
Not all lenders offer bad credit car loans. Work with experienced finance specialists who look past your history and can offer you the finance you need to get the wheels you want.
Contact Finance One today to learn more about your car finance options!
Apply Online NowNormal lending criteria apply. Fees and charges are payable. Terms and conditions apply.
Finance One means:
Fin One Pty Ltd – ABN: 80 139 719 903
Australian Credit Licence: 387528
Disclaimer: The information above is of a general nature only and does not consider your personal objectives, financial situation or particular needs. You should consider seeking independent advice regarding your legal, financial, taxation or other needs, to check how the information relates to your particular circumstances. We do not accept responsibility for any loss arising from the use of, or reliance on, the information. All loan applications are subject to normal lending criteria. Fees and charges payable. Terms and conditions apply.
