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Car Loans | Do I need a deposit?

Neil Crotty
Aug 10, 2021 12:01:34 PM

Contents

  1. What is a no-deposit car loan? 
  2. What is the benefit of a no-deposit car loan?
  3. Does a deposit help you as a client?
  4. Who can get a no-deposit car loan? 
  5. Why does a lender require a deposit? 
  6. How does a deposit benefit the lender? 
  7. How important is capacity on a no-deposit loan?
  8. Can I get a no-deposit car loan if I have bad credit?
  9. The takeaway
  10. How does Zink Software help you increase your chances of getting a no-deposit loan?

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1. What is a no-deposit car loan?

When financing, motor vehicle clients usually have the option to finance the full amount or place a deposit on the loan, however, be aware some lenders will require a deposit to settle the loan. A deposit may make the asset you are looking for affordable, by reducing the payments to within capacity in the lender's eyes. It should be noted that you can reduce payments by taking a longer-term loan so a deposit isn’t the only way to reduce payments. Some lenders will allow a residual or balloon payment at the end of the term to reduce payments as well

2. What is the benefit of a no-deposit loan?

The obvious benefit of a no deposit loan is you don’t have to pay with hard-earned cash to buy the asset you require or desire. Borrowing the full amount plus any applicable fees leaves you with the cash flow you currently have and the ability to pay the loan over the term as opposed to parting with cash and or credit at the beginning of the loan. Why would you put a deposit on a car loan from your credit card at high rates when you can totally access the assets' funds through one lender?

3. Does a deposit help you as a client?

If contributing with a deposit on your loan helps you or not as a client will depend on your circumstances. The general rule is; the less you borrow, the less interest you pay, but this is not always the best for your individual circumstances. Cash can be used in much more beneficial ways with examples such as reducing high interests, paying credit cards, investments, cash flow, or the surety of having backup money for emergency items. That lump sum for the deposit on a loan could retract from the deposit for a home, be used for a long-needed holiday or any of life’s little luxury’s. 

4. Who can get a no-deposit car loan?

This depends on the specific lender, but the rule of thumb is anyone that;

  • Doesn't have adverse credit
  • Has a good credit rating
  • Has a stable job
  • Has the capacity to repay the loan

5. Why does a lender require a deposit?

Lenders will sometimes request a deposit for the following reasons;

  • First-time lend
  • Limited previous credit
  • No borrowing at this size of lend
  • Impaired previous credit
  • Lack of stability in employment
  • No property backing
  • Limited savings
  • Lack of stability in residence
  • Vehicle booking price
  • Or it is simply their policy

6. How does a deposit benefit the lender?

  • It shows your commitment to the loan.
  • It reduces the exposure of the finance company as they have the security of the vehicle and in the event of a return, they will have closer parity to the money owed against the asset value.
  • It can reduce payments and increase affordability to the client.
  • It shows the client has access to cash and is not living week to week. 

7. How important is capacity on a no-deposit loan?

Your capacity to repay the loan is imperative to borrowing money. Your capacity is determined by the funders, who have strict government implemented guidelines that must be adhered to for consumer lending.

8. Can I get a no-deposit car loan if I have bad credit?

Yes, you can get approved for a no deposit bad credit loan depending on the lender your loan is submitted to. To get approved for a bad credit no-deposit car loan a good first step is to reach out to your professional asset finance broker. One of the advantages of Ausloans' 40+ lender panel is that it includes lenders that offer no-deposit loans for applicants with a bad credit score.

No deposit bad credit loans

The Takeaway

In summary, each lender has specific criteria as to who will require a deposit and who will not. This is based on a number of criteria and differing policies for each lender.

Ausloans has a panel of over 40 lenders, which opens up our customers' availability of no deposit loans. The availability of such a diverse lending panel allows more options for the customer and access to the flexibility of each lender.

How does Zink Software help you increase your chances of getting a no-deposit loan?

Our market-leading Zink technology can advise clients in a matter of minutes which lenders specific to the client's circumstances, will lend to them and if a deposit is required or not. Zink advanced matching technology protects you against applying to numerous places to find the best-suited loan, which in turn can ruin your credit rating as applying frequently is detrimental to credit scores. Each time you apply for a loan a record of the application is placed on your credit report. Frequent or consistent enquiries reduces your score and makes you less attractive to a lender and could in fact increase the likelihood of a deposit being required.

Zink protects you from that with NO impact on your credit score. 

Got more questions about car loans? Check out our car loans guide

No deposit car loans

 

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