No-deposit car finance: how it works

Get a car now and pay for it later with no-deposit car finance

BuyaCar team
Jul 30, 2018

No-deposit finance can enable you to get a new or used car without having to make any payments in advance - apart from a standard reservation fee.

It's particularly useful when you need to replace your vehicle but don't have spare cash or would rather not raid your savings account. You'll typically receive your car and won't have anything to pay for almost a month before repayments start.

This option can buy time in order to accrue some savings before you start paying for your car in monthly instalments.

However, this option is usually more expensive in the long run, as you'll be borrowing more money than if you had put down a deposit, which increases interest costs and monthly repayments. You’ll also need to have a strong credit score, as lenders often reserve no-deposit finance for customers with a strong rating.


No-deposit car finance: how it works

If you're buying a nearly-new or used car through BuyaCar, then you'll normally reserve it with a £199 reservation fee and apply for finance, requesting a no-deposit quote.

Once accepted, you won't need to make any repayments before the car arrives. When it is delivered, you'll then have 30 days before your first monthly instalment is collected. Your £199 reservation fee is also refunded to you during this stage.

For new cars, finance is normally arranged through manufacturer schemes, which usually work in a similar way.


No-deposit car finance: types of finance

The most popular types of car finance are available with a no-deposit option.

This includes Personal Contract Purchase (PCP), which is used in most private new car sales. It's flexible and more affordable than some other finance options because your repayments only cover part of the car's cost (the value that it's expected to lose during the agreement).

At the end you can return the car and walk away or buy it for a lump sum (the remainder of the car's cost), which can be refinanced. If the vehicle is worth more than the cost of buying it, then you'll also have the option of trading it in for another one. The difference can be used towards another finance deposit, for example.

Hire Purchase finance is also a possibility. This has higher monthly payments than PCP, but at the end of the agreement the car is fully paid up and yours. This means you can keep it or sell it.

No-deposit car finance: requirements

It varies from person to person, but the biggest requirement is a strong credit profile. No-deposit finance is generally only offered to consumers who have a good credit rating, and a proven record of paying back credit on time.

Everyone seeking finance is put through an affordability test to ensure that the repayments won't put them into financial difficulties. The test becomes harder to pass without a deposit because the monthly repayments on a no-deposit loan are higher.

Interest rates may even be higher if you don't put down a deposit because it involves borrowing more money. This makes it harder for finance companies to recover the debt if there are repayment problems - particularly near the beginning of the agreement, when the car is often worth less than the amount owed.

That's why it usually pays to put down a deposit of you can do so: you're more likely to secure a better interest rate and end up paying less in the long run.


No-deposit car finance: Which cars can I get?

Used, nearly new, and pre-registered models are all available with no-deposit car finance from BuyaCar. If it’s in stock and you're accepted by a lender, no-deposit car finance is an option. Brand new cars which have been built, but not registered, are also eligible.

Manufacturers regularly offer no-deposit options on brand new cars that are built to your specification by a manufacturer. You'll need to configure a car and then ask for details about finance offers.


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