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Car finance with no deposit

How to get car finance without a deposit

Most people think that a finance agreement requires some kind of deposit. After all, in many areas of life, this is the norm. House deposits are usually required for a mortgage, while you’ll look to put money towards other larger items in order to secure a finance agreement.

However, there is a way to get a finance deal on a car without requiring a deposit. Here, we’re going to take a look through what you need to know about buying a car this way.

What is no deposit car finance?

Basically, it gives you the option to take out finance on a car without having to put any money towards it beforehand. Though you’ll pay more in monthly payments than if you had a deposit to contribute, it’s still a great way of getting into a car.

What’s the benefit of doing it?

Taking out a finance policy without a deposit means that you don’t need to save a sum of cash to put towards a new car. This gives you the freedom to get into a new car more quickly than you otherwise might, which is really handy if you’re in a jam and need to get a new car sorted immediately. 

Are there any drawbacks?

As we mentioned, because you wouldn’t be putting any money towards your finance agreement you’ll likely pay more in monthly payments by comparison. However, that doesn’t necessarily mean that your monthly payments are going to be sky-high and you’ll still be able to find a good deal if you shop around.  

Remember that since you’re paying more in finance payments you’ll be charged more interest - so you’ll likely end up paying more overall compared with if you’d put a deposit towards it. 

Can you do no deposit finance on used cars?

Of course. You’re able to find a no deposit finance agreement on both new and used cars and you might even find a better deal on the latter, too.

Will I need a credit check to take ot no deposit car finance?

Yes. Much like any other finance agreement, you’ll need to have a credit check to find out whether you’re eligible or not. Since a no-deposit finance agreement requires more outlay from the lender, you might not be able to secure one if you have a poor credit history.

Could I put my vehicle towards the finance payments in part-exchange?

Of course. If you’re not able to put a deposit towards a new finance agreement then putting your existing car as part-exchange towards it could be a really good option. This will help lower your monthly costs, too.

Does no deposit car finance only apply to PCP ?

It doesn’t. A no deposit finance agreement can be used for a variety of agreements. With a PCP deal, you make monthly payments but then you can return the vehicle at the end of your term with nothing left to pay, or there’s the option to buy the vehicle with a large final payment. However, the majority of people choose to get a new car and enter into a new finance agreement. But it can also be used for a Hire Purchase (HP) agreement too. This will bring higher monthly payments than a PCP plan, but you own the car once you’ve finished your payments. Then, you’re able to drive your car without any further payments or you can sell it.