Buying a car is a significant decision requiring considerable research and financial planning. Cars with multiple cutting-edge features and varying price ranges are available today. But buying a car, particularly with a large down payment, isn’t always feasible. Down payment amounts can cause a financial crunch, mainly if the auto loan amount is huge. Fortunately, there are some ways in which one can avoid hefty down payments on auto loans.

Consider zero-down-payment loans and set a budget
There are multiple banks and financial institutions in the country that offer auto loans without down payments, so it’s important to research well on the options available. The best bet is to shortlist reliable local lenders who offer zero-down-payment loans at low interest rates.

When going for zero-down-payment loans to buy a car, one should also consider other factors, such as the intervals at which the loan has to be repaid using a bill, the car brands that the lender covers, and one’s personal financial plans. Also, it’s best to avoid securing an auto loan whose total amount either exceeds or is lower than the total amount to be spent on the car. Setting a clear budget is the best way to prevent such situations.

Pay using a credit card
Since credit cards allow one to pay the due amount flexibly within a given period, they are the best options for huge investments. Many car dealers also accept payments through credit cards as down payments because the amount is credited at once to the vendor’s account without the buyer having to pay for it immediately. Another reason to pay using credit cards is that they have flexible repayment options through which one can pay off large amounts in monthly installments. And while one may have to pay an additional fee, it’s still a better option than making a hefty down payment.

Boost the credit score
Credit score is an essential criterion that lenders consider to approve or reject no-down-payment auto loans. Higher credit scores assure lenders that the borrower is likely to pay the dues on time, so those with good credit scores have better chances of loan approvals than borrowers with bad credit reports. In such cases, the best bet is to wait for a few months and boost one’s credit score—by paying bills on time, having a low credit utilization score, etc.—before opting for a car loan.  But, there are some banks that have relatively lenient credit requirements, so if waiting isn’t an option, one might want to check these out. Further, having a co-signer or co-borrower with a good credit score might also help with no-down-payment auto loan approval.

Choose a less expensive or used car
While a luxurious car is a dream for many, buying and maintaining a car with features one might probably never use is an expensive mistake. These features unnecessarily increase the total cost of the car, and one might have to make a hefty down payment. So, even if a down payment is unavoidable in a certain situation, one can minimize the amount by buying a less expensive car, such as a used car, and paying in installments. Buying a used car in good condition is a great way to reduce the total amount, as second-hand cars are more affordable than new ones.

Select high monthly installments
To buy a car without a down payment, one might have to go for higher monthly repayments. By opting for a high periodic repayment amount, one might be able to get an easy auto loan approval, but it might also mean high interest rates. So, borrowers should be prepared to spend this additional amount in the form of interest if they choose to make huge monthly repayments. It helps to compare the interest rates from different institutions and opt for one that offers the most flexible repayment term and the lowest interest rates.

Explore different financing options
Different institutions may have set different criteria for financing new and used vehicles without down payments. Although it may be tempting to shortlist a reputed lending institution, comparing financing options helps find a lender who provides the maximum benefits with high flexibility and low interest rates. Also, they might be lenient with their requirements, including the minimum and maximum ages of borrowers , citizenship, and conditions for self-employed persons.

Further, borrowers must check and compare the processing charges to opt for a lender with affordable processing and other charges. At the same time, one should not compromise on factors like lender ratings, brands covered, online reviews, and other borrowers’ reviews.

Before buying a car without a down payment, one should always research the brand and model, compare prices, check for discounts and offers, and consider one’s personal requirements. With proper research and consideration of personal needs, one can avail of an auto loan with flexible repayment options and low interest rates.