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Wilmington Trust How much does Car loan without down payment Which is better What to do
Wilmington Trust How much does Car loan without down payment Which is better What to do
Corporate & Institutional

Car loan without down payment - what's the catch?

In the car loan market, a car loan is actively advertised without a down payment. At first glance, a potential car owner such an operation is very convenient and profitable. But if you look closely at the specific conditions of any selected bank, you can see several disadvantages of such lending.

Pitfalls or what they do not say in advertising:

1. The cost of the loan.

Often customers mistakenly believe that a loan without a down payment does not imply investments at all. However, regardless of the size of the down payment, it is necessary to have funds to pay for notarial services for registration of collateral, insurance and commission.

2. Short term.

The higher the down payment, the longer the loan term can be up to 5-7 years. With zero buyer's participation, you can count on a loan term of a maximum of 2 years and, accordingly, higher monthly loan payments.

3. Increased percentage.

For a bank, such loans are more risky, therefore, the interest rate will be higher than with a standard loan. Those. monthly you have to pay more to the bank.

4. Additional security.

Also, to minimize risks, the bank may insist on an additional collateral or guarantee of solvent individuals or companies, which may cause some difficulties in collecting documents and extend the loan consideration period.

5. Consumer loan for a down payment.

Sometimes, the absence of a down payment by a bank may mean issuing a consumer loan to finance a down payment and insurance. It is convenient, but expensive, since such a loan is unsecured and with a high interest rate.

6. Other additional conditions.

There may be other additional conditions, for example, increased or additional insurance or commission, a more thorough analysis of the financial condition or a higher level of income, etc.

Thus, before applying for a car loan with a zero first installment, it is necessary to calculate the initial and further monthly expenses and decide which costs should be minimized.

Christophe Schroeder
Christophe Schroeder
Senior Vice President
+44 (0)20 7397 3628
Email Christophe