If you want to buy a car with no money down, there are deals out there but you need to familiarize yourself with the Canadian car-buying market.
Our Stoney Creek shares some insight useful for anyone planning to buy a car no money down. We hope it helps!
How no money down deals work
As the name implies, with these deals (if approved) you can buy a car with no money down at all. This is a great offer for individuals who do not have any money put aside but need a car right away.
To qualify for this type of financing, there are some key things you will need to do to qualify which we will touch on later. When you drive a new car off the dealership parking lot, it suffers a tremendous amount of depreciation.
Since you did not put any money down, the lender is exposing themselves to 100% of the depreciation risk associated with the transaction.
To mitigate that risk, prospective lenders apply strict loan underwriting guidelines which we will talk about.
Car loan fundamentals 101
Lenders broadly speaking are interested in two key things when trying to determine whether or not to approve a car loan in Stoney Creek.
The first is whether the borrower can repay the loan as agreed.
To determine whether the prospective borrower has the capacity, the lender will want to review the income and based on that determine whether you have enough income. The debt-to-ratio is typically 40% but each lender will set their limits.
After confirming the borrower’s capacity to pay, the lender wants to know whether the borrower is going to keep their commitment.
This is where the credit score comes into play, since no one can predict the future all we can go by is past performance.
If the borrower has a credit score over 700, it shows they are responsible for their financial commitments and have been paying their debts as agreed for quite some time.
Finding lenders that offer no money down car loans in Stoney Creek
Some lenders advertise online but they use these offers as bait. Most of the online advertisers are not able to offer no money down car loans, which is usually the domain of dealerships.
When you work with a local dealership, you are going to have the benefit of accessing no money down car loans. But the value of these dealerships goes far beyond a simple offer.
If you have a credit score that is not high enough to qualify for a no money down car loan, the dealership will still be able to get you approved for a car loan through one of their lenders.
The dealership can also help advise you on how to improve your credit so you will qualify for prime interest rates in the future. It could be something as simple as paying your bills on time to raise your score but only the credit expert at the dealership will be able to advise you.
Since you know how to get a no-money-down car loan, why not reach out to a local dealership and see what options are available to you.
For those of you who know that you have a challenging credit situation, please visit Dixie Auto Loans where we have a team of credit specialists ready to help you get approved for a car loan today!
For any questions or concerns, please don’t hesitate to contact us here!