Can you get zero deposit car finance options?

Zero deposit car finance is a financing option that allows you to buy a car without paying a lump sum at the start.

Typically, when you finance a car, you need to pay a deposit to lower the loan amount. With no deposit finance, you borrow the entire amount needed to purchase the vehicle. This total is then paid back through fixed monthly payments, over a set period.

However, before proceeding, it's essential to evaluate your long-term financial situation to ensure that the monthly payments are affordable, particularly if you face unexpected costs.

How does no deposit car finance work?

No deposit car finance is designed to make it easier for you to buy a car. It means you don’t need to save for a deposit. Here’s how it works:

Monthly payments

Since you aren’t paying anything upfront, your monthly payments will generally be higher than agreements where you pay a deposit.

This is because you are borrowing the entire cost of the car. For example, if you finance a car that costs £10,000 without a deposit, you will need to pay back that full amount over time.

Look carefully at whether higher monthly payments work for you. You should make sure that they fit within your monthly budget alongside your other bills and costs. We encourage you to assess your monthly budget carefully to ensure these payments are manageable throughout the loan term.

Interest rates

When you take out a no deposit car finance agreement, the interest rate is applied to the full amount you are borrowing.

This means that your monthly repayments will include not just the amount you borrowed, but also the interest charged by the lender for borrowing that money.

Since the total amount borrowed is higher (because there’s no deposit), the interest you pay can add up, making your monthly payments more expensive, than if you had paid a deposit.

It’s important to fully understand the total cost of borrowing, including the interest and any associated fees. Be sure to check whether there are any early repayment charges or other fees before committing.

Finance term

The finance term is the length of time over which you agree to repay the loan.

For no deposit car finance, this term usually ranges from 24 to 60 months, which is equivalent to 2 to 5 years.

A longer term may result in lower monthly payments, but you might end up paying more in interest overall.

This is because you can split the lump sum you borrowed into smaller amounts to repay each month. But, because you are increasing the number of months you are paying back the loan, there are a larger number of interest payments.

The more interest you pay alongside the lump sum you borrowed, the greater the overall amount you repay.

On the other hand, a shorter term means higher monthly payments, but less interest paid in total.

Types of no deposit finance

You can have zero deposit finance through options like personal contract purchase (PCP) and hire purchase car finance (HP).

• Hire purchase: With HP, you make monthly payments until you pay off the full value of the car. Once you make your last payment, the car is officially yours. HP car finance options tend to offer more flexibility compared to PCP, and you may or may not have to pay a deposit,.
• Personal contract purchase: With PCP, your monthly payments are typically lower because they mainly cover the car’s depreciation (decrease in value over time) rather than the full price. At the end of the agreement, you have a few choices: pay a lump sum to keep the car, return the car, or trade it in for a new one.

It’s important to fully understand these options and choose the one that best fits your financial situation.

What are the benefits of no deposit car finance?

Zero deposit car finance offers several advantages that can make it an appealing option for many car buyers.

• No upfront payment: The biggest advantage of no deposit car finance is that you don’t need to save up for a deposit. This means you can get on the road much faster without the delay of having to gather a lump sum of money. Whether you need a car for work, family, or personal use, this option lets you start driving your new vehicle sooner.
• Flexibility: No deposit car finance is available for both new and used vehicles. This flexibility gives you a wide range of choices when financing a used car, allowing you to find a vehicle that meets your needs and fits your lifestyle. Whether you’re looking for a brand-new model or a reliable second-hand car, you can explore various options without the constraint of a deposit.

While the no deposit option allows you to get on the road faster, remember that you may pay more in interest over time. It’s important to balance the convenience of no upfront cost with the potential for higher overall costs.

What to consider before choosing zero deposit car finance

No deposit car finance can help you get a car, without the worry of upfront costs. But, it is important to think about these things before you go ahead:

• Higher monthly payments: Since you are borrowing the entire cost of the vehicle, your monthly payments will be higher than if you had paid a deposit.
• Total cost: Because you’re financing the whole amount, the overall cost of the loan, including interest, may be higher compared to deals that involve a deposit.
• Eligibility: Some lenders will look at your credit history. You may need a good credit score to qualify for zero deposit car finance. Some lenders might have options for those with bad credit, but the interest rates could be higher.
• Affordability: Make sure the monthly payments fit within your budget. We recommend reviewing your long-term financial situation to ensure you can comfortably meet the monthly payments, even in the event of unexpected expenses. If you need assistance, feel free to contact our team for help in understanding your options.

Is zero deposit car finance the right choice for you?

Zero deposit car finance can be a great option if you want to spread the cost of a vehicle without making an upfront payment.

However, it’s important to weigh the pros and cons and consider whether the higher monthly payments fit within your budget. If you’re unsure, we encourage you to review your budget or speak to our support team for assistance in understanding the financial implications before making a decision.

Zero deposit car finance with AutoMoney Motor Finance

AutoMoney Motor Finance offers a zero deposit car finance option for those looking to finance a used car.

Deposits are optional, giving our customers the flexibility to apply for car finance without needing to make any upfront payments. With us, you can also put down a deposit to reduce your monthly payments. It is up to you.

Apply for car finance with AutoMoney

If you think no deposit HP car finance is right for you, call our friendly team on the free phone number above, or click through to apply for car finance with us.

Representative example

You could borrow £10,000 over 60 months with an initial payment of £490.66 (including £199 Admin Fee) followed by 58 monthly payments of £291.66 with a final payment of £490.66 (including optional £199 Option to Purchase Fee).

Total amount repayable will be £17,897.60.

29.3% APR, annual interest rate (fixed) 24.7%.

This example uses the representative APR. This is the rate at least 51% of customers are expected to get.

Lending is subject to status and additional affordability checks. Rates quoted are subject to change and will depend on lending amount and personal circumstances.

Before applying, carefully review all terms and conditions, including any potential early repayment fees or charges that may apply during the life of the loan.

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