Buying a car is a significant investment for anyone. Among all the considerations that go into purchasing a car, such as specifications, model, engine type, and power, the cost usually plays the most significant role. One has to factor in not just the car cost but also insurance, registration, taxes, chattel, and down payments in their budget. There’s a way to skip one of the major costs while buying a car – the down payment.

What is a down payment?
Down payment, also known as spot cash or cash out, refers to the upfront, out-of-pocket amount a car buyer pays to the dealership at the time of purchase to transfer ownership of the vehicle. No down payment means that the buyer skips this expense. In other words, one drives the car out of the showroom without paying a peso. Having said that, one may still have to pay for the vehicle registration, insurance, and chattel mortgage fees.

Can one finance a car with no down payment?
Technically, yes. The buyer takes a loan for the entire car value and pays the amount in installments based on the loan tenure. While this payment method may seem easier and quicker, banks or other lenders often consider it riskier. So, the loan-acquiring process may be lengthy or subject to rejection in case the borrower has a weak credit history.

Ways to buy a car without down payment

Meet the eligibility criteria
One needs to be eligible not only to own a car but also to apply for an auto loan in the country. Banks in the Philippines accept applications from borrowers who are 21 years or older. They must also not be older than 65 until the auto loan matures. Further, the borrower must hold citizenship of the Philippines and be an earning individual (either externally employed or self-employed) for at least two years. Apart from this, the monthly salary of either the individual or the household should be ₱40,000.

Those who tick off all these boxes are eligible to apply for an auto loan and, as a result, can buy a car without a down payment. An add-on requirement for those who wish to opt for car financing without a down payment is a solid credit score and a higher monthly income.

Explore online
Usually, one can also find no-down-payment car deals on popular automobile websites and apps that curate and list all the vehicles, banks, and zero-down-payment financing options that are currently available. The advantage of looking through these platforms is that one will almost always find some cars available for purchase without a down payment, along with their offer time limits, and there won’t be an issue of missing out on deals.

Look for dealership offers
Another way to get a good and trusted deal is at local dealerships. Unlike online websites that are more prone to scams, local dealerships have a reputation to maintain and may run occasional offers to woo customers.

Research bank promo deals
Banks or other financial institutions have promotional deals offering car loans with no down payment to attract and retain their customers. To ensure that one finds genuine and good car financing options without down payments, one should research all these areas, both online and offline.

Review terms and conditions
It’s important to thoroughly review the terms and conditions when buying a car with no down payment. Sometimes, there may be several hidden terms like minimum loan amount or maximum loan term limit. Sometimes, the bank may also hold up a portion of the car selling price in one’s deposit account, which serves as a down payment.

Apply for car financing
Before driving the car out of the showroom, buyers should gather and submit their documents to the chosen dealership or bank. These may include proof of income, residence, and identification, as well as any other requested documents. Then, one must submit an application and wait for approval before purchasing the car.

Finding cars without down payments
As mentioned earlier, the easiest way to know if a car is being offered for no down payment is to look for promo offers on automobile-selling websites or local dealerships. One may find several car models on sale with no down payment option. But it’s important to note that these offers are usually only available for a specific period and at limited locations. So, one should thoroughly research the preferred car and where it is available without a down payment option.

Things to remember while buying cars with no down payment

• Car loans with no down payments usually have higher interest rates compared to usual automobile loans
• Since it’s not a norm, one may have to wait for exclusive or limited-time deals to buy a car with no down payment
• Monthly repayment of the car loan may be quite high
• The loan tenure for cars without a down payment is usually longer than that for normal car loans

With these conditions, one usually ends up paying more for the car in the long run. But, buying a car without a down payment can be a viable option for those who need a vehicle urgently or want to own a car without seeing a significant drop in their savings. Either way, it’s best to compare different car financing options and determine one’s expenses in the long run before deciding. Some other financing options include a home equity loan, which allows car financing against one’s home; credit card payment, which can add credit card points to one’s account; or dealership financing, which offers faster car loan processing.