If you have been financially tied down from buying a new car because you cannot afford the up-front deposit or exchange of your current car, we have got your back.
No- deposit car finance is just that. It means you can acquire a new or used car without paying a deposit, which excludes the standard reservation fee.
Let’s take a look at how no-deposit car finance works, the payment options, and the eligibility criteria.
What is no-deposit car finance?
Making a down payment for car finance isn’t always easy. If you are struggling to put together the deposit for the car of your dreams, then no-deposit car finance is your best bet.
You can get zero deposit deals so that you can hit the road with the car you really want.
This just means that you make up the no deposit by paying slightly higher monthly costs than you can afford.
What cars can I get with no-deposit finance?
There is an incredible range of cars available for no-deposit car finance plans.
If you are head over heels for a sporty BMW or Ford, or you enjoy the luxury of a Mercedes-Benz, look no further. There are plenty of affordable deals on a variety of top car brands.
Did you know that we offer an exclusive deal where you can receive your car and pay zero fees for up to 2 months???
We really know how to put a smile across your face!
What is the process of no-deposit car finance?
No-deposit finance plans mean making higher monthly payments and meeting our lender’s requirements.
If you are a successful applicant, you won’t have to pay anything for the first few months based on the agreed terms and conditions with the lender. This will help you save and be in a financially good position to meet your monthly repayments.
It’s important to have a good credit score because this boosts your lender’s confidence in your ability to make your monthly payments on time. Lenders’ reserve no-deposit plans for applicants have strong ratings.
But, every application is individually considered and we have a 95% approval rate for no-deposit car finance.
Types of no-deposit car finance
You will find many types of car finance available with a no-deposit option. Let’s take a look at two of the most common no-deposit car finance options.
Personal Contract Purchase (PCP) Finance
More than 90% of new cars are paid for using PCP, and it’s also a more affordable way to buy a used car.
PCP is flexible and only covers a portion of the car’s cost (the depreciation of the vehicle during the agreement), making it more cost effective than other car finance options.
PCP is a popular car finance because you pay a fixed monthly fee that is lower than most car loans. This deal generally lasts two to five years.
You also have a choice of buying the car in the end if you make the optional final payment. This payment covers the estimated worth of the car at the end of the finance contract. But, if you don’t want to purchase the car, you can return it and start the process again with a new car.
If the car is worth more than the optional final payment, you will have the option of trading it in for another car. The difference between the old car and the new car is known as equity, and it will be subtracted from the deposit on your next finance contract. The more equity your car has to put towards the deposit of your next car, the less the monthly payments will be on the car.
A major advantage of PCP is that if the car suddenly depreciates, you are protected. However there are some downfalls too. If you exceed the mileage cap, you will be charged extra and the car must be kept in a good condition to avoid damage costs.
Hire Purchase
Hire Purchase is another common car finance choice. It requires higher monthly payments than PCP, but the payments cover the full value of the car.
So once you make that final monthly payment, the car is yours. There is no lump sum to be paid at the end, unlike with the PCP. The total cost of the car is divided across a deposit and fixed monthly payments over a period of two to five years.
One way to reduce the cost of your monthly payments, is to opt for a longer contract. Although this means that you will have to pay more interest.
Hire purchase also offers a reduced interest rate than PCP.
Even though it is also available for new cars, it remains a popular finance choice for older used cars. Because with older cars the future value of the car is uncertain, making it easier for lenders to calculate. The cost of the car, with interest, is divided into equal monthly payments.
Get your car now and pay later option
Our USP allows you to walk away with your dream car now and pay later on our no-deposit car finance plans. You don’t have to pay a cent for up to 2 months, as mentioned above.
If you find the car you want from our stock, we can process it the same day for you.
All our used and new vehicles offer the “buy now and pay later option” and are ready for delivery.
What is the eligibility criteria for no-deposit car finance?
The exact requirements to be approved for no-deposit car finance varys according to the lender. Let’s take a look at some of the general requirements when applying for no-deposit car finance plans.
- You need to be over 18 years old.
- A strong credit score is a must. No-deposit finance is usually only available to drivers who hold a good credit rating and have a proven record of paying back credit on time.
- Pass the affordability test to show that you can meet the monthly repayments.
- Basic application documents, including your proof of residence, driver’s license, financial documents, etc.
Advantages & disadvantages of no-deposit car finance
While no-deposit car finance offers a number of advantages, there are some downfalls to look out for as well. We’ve highlighted the top advantages and disadvantages to help you decide if no-deposit car finance is the best option for you.
Advantages
- Avoid paying a deposit at the start of the contract.
- Get the car of your dreams without having to break your budget.
- Car finance counts towards your credit score and can improve your rating.
- Flexibility of cost- you can find something that suits your monthly budget.
Disadvantages
- Higher monthly payments, which means you could end up paying considerably more over time.
- If you are looking to buy the car in the end with PCP, the ‘balloon payment’ or final optional payment may be larger.
- Mileage restrictions, if exceeded you will have to pay additional charges.
- Damage and wear inspection at the end of the contract- you may have to pay for repairs.
What to consider when applying for no-deposit car finance?
No-deposit car finance sounds like the absolute dream. But there are certain factors you should take into consideration when applying for no-deposit car finance. We’ve outlined some of these factors for you, below:
Paying more over time
When you apply for no-deposit car finance, you generally end up paying more for the car over time. Like any other loan, borrowed money has interest added to it.
What this means is that you will pay more for the car, then if you had to buy it in one full payment.
Monitor the mileage
Most car finance agreements, especially PCP ones, require you to stay below a certain mileage per year.
Remember, a car’s mileage and age contribute towards it’s depreciation. So mileage restrictions are a protective measure by the lender or car dealership.
Several insurance policies also have mileage requirements. So it’s good to keep track of your mileage because it can help you save money on insurance.
Consider wear and tear
If your car finance contract states that you may not own the car at the end of the contract, then you should keep in mind wear and tear. If this is the case, you could be held responsible for any damage costs.
If you know there is a possibility of wear and tear, because you have pets or kids, then this is important to consider when making a decision.
It’s also important to remember that you cannot make modifications on a car if it is on finance.
Recurring costs
This goes without saying, but car finance means ongoing costs. If you buy a car outright, you only have to consider car running costs on a monthly basis.
But with car finance, you easily get roped into recurring costs and getting new models once contracts end. Before you decide to add this cost to your monthly priority bills, think about other commitments you may have.
If handled responsibly car finance can improve your credit score, but if not then it can even lower your score.
If you cannot keep up with the monthly repayments, it will be logged on your credit file. Before you sign an agreement, make sure you can cover the costs every month.
Conclusion
We understand that purchasing a car on finance is the second biggest commitment after acquiring a house. We have an exceptionally high approval rate for no-deposit car finance plans.
