What is no deposit car finance?
No deposit or zero deposit car finance refers to a financing option where you can purchase a car without making an upfront deposit or down payment. Traditionally, when you buy a car through finance, you are required to provide a certain amount of money as a down payment, typically a percentage of the car's total cost.
With no deposit car finance, you can finance the entire purchase price of the vehicle without making any initial payment. The lender will include the deposit in the total amount financed. Similarly, an unsecured personal loan doesn't require a deposit. Instead, you borrow a lump sum from a lender to cover the cost of the vehicle. This makes it a great option if you need a car at short notice or if you’d find it hard to pay a large deposit.
How does no deposit car finance work?
No deposit car finance lets you purchase a vehicle without making an upfront payment. This can be arranged either through a car dealership, a specialist lender, or with an unsecured personal loan from a bank or finance provider:
Application – You apply for no deposit car finance or an unsecured personal loan, providing details such as your income, employment status, and credit history.
Approval and credit check – The lender assesses your application and performs a credit check to evaluate your creditworthiness. They will review factors such as your credit score, income stability, and existing financial obligations.
Loan offer – If your application is approved, you'll receive a loan offer outlining the terms and conditions of the financing arrangement. This includes the loan amount, interest rate, repayment period, and any additional fees or charges.
Monthly payments – With a no deposit car finance arrangement, you will typically repay the loan amount including the deposit in monthly instalments over a fixed period, often ranging from one to five years. The repayment amount includes both the principal amount and the interest charged.
With an unsecured personal loan, you’re free to buy your car from almost anywhere, giving you greater flexibility in your purchase.
How can I apply for no deposit car finance?
When you apply for no deposit car finance, most lenders will carry out credit and eligibility checks to determine if they can offer you a finance agreement. You may need documents to prove to the lender that the information you provided in your application was accurate - although lenders can complete these checks automatically in many cases. The information required may include:
Proof of identity – All applicants must be aged 18 or over
Proof of address – Address history from the past three years.
Proof of earnings – This could include personal income, and household income if you have dependents such as children.
Employment information – Details about your current job, including your role and how long you’ve been employed.
Here at Oodle, if you're eligible for car finance then you're eligible for zero deposit car finance through an unsecured personal loan - you can start your finance application online here. As part of this process we will carry out a soft credit check to understand how much we can lend you and under what terms.
Pros and cons of no deposit car finance
As with any type of car finance, it’s best to weigh up your options first to understand whether this particular type of finance suits your own personal circumstances – there is no one-size fits all answer.
Pros
If you choose a no deposit car finance deal or an unsecured personal loan you can take the keys and drive without having paid anything other than a reservation fee (depending where you’re getting your new car from). This means you could get your new car more quickly, as you wouldn’t need to save up or use money you’ve set aside for a rainy day.
Cons
If you don’t pay a deposit, the cost of your finance agreement becomes greater. This could increase your monthly payments or make your agreement period longer, meaning you may need to pay more in total across the duration of your loan.