Truth about no deposit car finance
Getting a new car can be an expensive and tiring ordeal. With so many different deals out there alongside so many different ways that you can pay for cars, many people get easily confused about the best way to purchase their new car. If you would like to pay monthly towards a car that you will eventually own, without having to pay a massive lump sum towards it at the beginning of the contract, car finance no deposit might be just the thing you are looking for. Many people are unsure whether no deposit car finance deals exist in the real world, or if there are hidden catches that they might be unaware of. If you like the sound of getting a car on finance without paying a deposit, read on to find out more.
No deposit car finance explained
What is it?
When it comes to car finance, you are normally expected to put down a deposit, which you can expect to range from a substantial to a proportionally large amount.Â This will then be followed by a series of monthly payments (a term agreed before the contract is signed) and then an extra balloon payment at the end if you wish to take ownership of the vehicle. Then you have the continuing issue of depreciation that has already ravaged your car. With no deposit car finance, you guessed it… you will not have to pay the deposit.
Is it worth it?
Many people are put off of car finance because of the amount of the deposit when that money could be spent elsewhere. Not many people have much spare cash lying around and the amount our old cars are now worth may not even cover the deposit if you look at how much they have depreciated.
Many people may need to upgrade if they have another child on the way or if their old car is simply falling apart. If this is the case and you have no money for a deposit then don’t panic just yet. There are some car finance agreements that offer you a chance to get a car without the need for a deposit. You can easily sign up to a finance agreement without a deposit and, if you can afford the monthly payments, you can drive away with ease.
Is it easier to lease a car?
When you get a car through car finance, in most cases, you end up having to pay an amount to take ownership of the car at the end of the contract through a balloon payment, which should take depreciation in to account. In fact, the whole point of a balloon payment is to calculate how much the car will have depreciated by the end of the agreement and then charge you the remaining value of the car.
Many people who would rather not pay big amounts towards the car in chunks may think about car leasing. This means that you will not have to pay a balloon payment at the end of the contract. Through a Contract Hire agreement, which is car leasing in its purest form, you lease the car for a period of time, paying monthly amounts and then you simply hand the car back and move on.
It is important to remember, though, that if you do decide to lease the car, you will be paying for the car on a monthly basis without ever being able to purchase the car at the end of the contract. Many people, therefore, decide that they would rather pay towards actually owning the car at the end of the agreement instead of paying for it monthly and then having to give it away. These types of people, who think they would like to pay monthly, but not have to pay a big deposit, would be enticed by a no deposit car finance deal.
Is there a catch?
You wouldn’t expect to be able to pay for car finance without a deposit and not have to pay the extra amount in some form or another, right? If you decide to get car finance without a deposit, your monthly payments will, of course, go up. If you place a deposit, your monthly payments will be lowered. The higher the deposit, the lower the payments.
There you have it, no deposit car finance can be a great option for people who would like to own their own car one day but are put off by large deposits that could be put to better use. There are numerous deals out there in the car finance industry for people in all sorts of situations; it is just about finding the right one for you.