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Finance Your Dream Car With a $0 Down Payment Car Loan

$0 down payment car loans how to


Generally when shopping for cars you’re aiming to get the biggest down payment possible, because the bigger the down payment the less interest you’ll accrue. However, in rare cases the opposite is true. Sometimes disaster strikes and you just need your hands on a car as soon as possible and there’s options for that too. This article will walk you through how to get a car with no down payment in Ontario.

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Why Do Down Payments Exist?

Down payments don’t just exist as a benefit to consumers, their primary function is security for the dealership.

When you take a loan out for a car, the return of money for the dealership is theoretical until that loan is fully paid off. So a down payment of 10-20% is money that is fully secure.

Dealerships and lenders like feeling secure, so the risk of going for a zero down payment is that they’ll increase the interest rate to compensate.

How To Qualify For a $0 Down Payment Car Loan

Applying for a zero down payment loan is easy,  getting qualified is the tricky part. Since you're not making a down payment, lenders will consider this loan high risk.

In order to qualify for a high risk loan you need to have a strong credit history. Your credit score should be good or great and you should have no blemishes on your history. Click here for some helpful tips on rebuilding your credit score.

The lender will also want assurances that you’ll be able to meet your monthly repayments, especially since without the down payment they’re going to be higher than average.

If you can prove that with your current income you’ll easily be able to pay the monthly amount you’ll have a much better chance of being approved for the loan.

Get Pre-Approved Online

Getting pre-approved online is a great way to start your process of financing a car with no down payment.

The best part about getting pre-approved online is that it's completely free and saves you potentially hours of time trying to search for a lender that will meet your unique set of needs.

It's also really easy. All you need to do is fill in a form with some basic information (see below) about your personal and financial situation, as well as some of your wants.

Once you've filled in the form, sit back and let the finance experts do the rest of the work for you!

Bad Credit Car Loan Approval

Do remember, every time you submit a form for pre-approval, there's a chance the dealership will perform a hard credit inquiry on you which can lower your credit score.

If someone has too many loan requests/pre-approval applications, it looks to the lender as though you're desperate for a loan. So, do some digging for the best looking options!


Can You Get $0 Down Payment Car Loans With Bad Credit?

Yes you can!

Many lenders are understanding to customers and understand that life is unpredictable but that doesn't mean someone shouldn't be able to qualify for a car loan with no down payment.

Remember though that with bad credit comes high interest rates, so you're going to have a more limited number of vehicle options.

Can You Get a Co-Signer?

If you've decided to finance a car loan with no down payment and bad credit, We strongly advise you find yourself a co-signer for the loan.

A co-signer is someone  close to you like family or a friend who signs a loan alongside you. If you can't pay the debt, your co-signer is then responsible.

People use co-signers as a way of building trust with lenders. They are more whiling to give a larger loan with lower interest if they have more faith that the debt will be repaid.

So when co-signing a car loan with no down payment, you'll have a larger loan budget with less interest and therefore more vehicle options.

Can You Fix Your Credit First?

As always, we also recommend you do what you can to improve your credit score before financing a car loan of any type.

It'll give you so many more options and you'll save a lot of money. But if you have bad credit score and need a new car now, no down payment options are available to you.

Make Sure You Can Afford It

Of course if you do that calculation and realize you can’t make those weekly payments then you’ve got big problems.

A zero down payment loan will not only be more expensive, with a higher interest rate, but it will also last longer, since you haven’t taken a chunk out of the loan with a down payment.

CNC How Much to spend on a car

A zero down payment loan can totally cripple you financially if you’re not careful, so make sure you only get one if you know for sure you can pay it off.

If you can’t then you need to compromise on the car you’re shopping for. A decent used car might be a much better option than something new.

When you're working out budgets, remember that an average car loan payment should be around 10% of your monthly gross pay.

This is why higher income means you'll have access to better auto loans with no down payment. Click here for a quick guide on coming up with a budget for your next car.

How to Save Some Money With $0 Down Car Financing

To save money on a car loan with no down payment, the only thing you can really do is try to make sure you're paying off the loan as quickly as you can.

This is especially true if you are struggling with bad credit because not only will you be paying a lot extra on interest, but you'll have more to pay because you didn't put any money down from the start.

Try starting off by adding a few dollars to each of your payments and keep increasing as you are able. Want to learn some ways to pay off a car loan faster? Click here.


If you're ready for a car loan in Southern Ontario, we'd love to help with that! simply fill in the form below to get started.

Car Loan Pre-Approval

    TAdvantage – Preapproval – Car Nation Canada