Buying a used car can be more economical than purchasing a new model. That being said, even used cars can be quite expensive, and one might need a loan to buy them. While a car loan can fund the purchase, making a down payment for it might still be a big expense for some. Fortunately, there are a few ways in which one can buy a car without having to make a down payment.

1. Look into no-deposit car financing
Traditional car financing options require individuals to make a down payment or deposit. The rest of the loan amount is then repaid through monthly instalments. Apart from this, there is a car financing option that does not require one to make a down payment. This type of financing option is called no-deposit car financing. Banks and various other financial institutions offer this form of credit for purchasing new and used cars.

Since individuals do not have to make a down payment for this loan, the entire amount of the car is expected to be repaid in monthly instalments. Plus, without a down payment, individuals must pay higher monthly instalments or opt for a longer loan term. Additionally, banks and other financial lenders have certain criteria for offering no-deposit car financing. For instance, those looking into this financing option must have good credit scores.

2. Apply for a loan with a co-signer
While no-deposit or no-down-payment car loans are available, credible lenders are quite stringent about their requirements; they want applicants to have a good credit history. If applicants have a bad credit score, they cannot qualify for a no-deposit car loan. The main reason is that lenders consider it a huge risk to loan money to those who might be unable to repay it. In such cases, individuals can ask their family members or friends with a good credit score to become their co-signers. A co-signer agrees to take responsibility for repaying the loan if the applicant fails to do so. Additionally, a co-signer with a good credit score will increase one’s likelihood of getting a loan.

That being said, before going down that road, one must be aware of all the associated risks. For instance, a co-signer has to repay the loan if the main applicant fails to do so. Also, if the main applicant misses out on instalments, their co-signer’s credit score will drop. Besides, a lack of clarity regarding payments and potential financial issues can create a rift between the co-signer and the main applicant. So, considering all the risks associated with getting a co-signer on board, it is essential.

3. Use a credit card
Another reliable way to purchase a used car without a down payment is with a credit card. For this, one first needs to approach a dealer who accepts card payments, as not all do. Additionally, before making a huge purchase with the card, one has to get permission from or notify the credit card company. Once the credit card company approves, one can proceed with the transaction and pay for the car with their card. One can then repay this credit card debt amount through monthly payments. Since credit cards usually levy a lot of interest, it is better to choose a zero-interest card for this purpose.

4. Trade in an old car
If one has an old car they wish to sell, they can leverage it to buy another car. When one trades in their old car, they will receive a substantial amount for it, which they can use as a down payment. Plus, if one can sell their old car to the same dealer from whom they are purchasing a used car, the dealer might simply consider the trade-in value as the down payment. One can also benefit from this move by maximising their car’s trade-in value. For this, they must ensure that their old car is in excellent condition before they take it to the dealer. One can get all the necessary repairs done and get the car properly washed to increase its value.

5. Apply for a personal loan
An unsecured personal loan can also be a great option to purchase a used car without a down payment. One of the best things about personal loans is that one does not have to make any upfront payments. Plus, unsecured personal loans do not even require one to pledge any collateral. Besides, with personal loans, one receives the funds quite quickly after the loan is approved. These funds can be used for any purpose, including buying a used car. When applying for a personal loan, it is better for one to approach multiple lenders for a soft inquiry and then check and compare their interest rates and terms. This can help one make an informed decision and choose a lender who best meets one’s criteria.