100% Finance For Car Loan – What You Need To Know

There are various ways to secure financing for your car and that includes 100% Finance For Car Loan. But what exactly is it? How does it work? Well, you’ll find answers to all that in this article in the subsequent paragraphs.

As someone who wishes to finance your car, it’s only proper that you do the necessary checks before deciding on how you choose to go about it. The 100% Finance For Car Loan is one of the ways you can finance your car. However, it also has its own merits and downsides you must take note of.

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What Is 100% Finance For Car Loan

100 percent finance for a car loan simply is a form of car finance where the borrower is not required to make any down-payment before qualifying for a car loan. It is normally called a Zero down payment car loan.

What it means is that, the lender decides to fund the entire value of the car you’re purchasing which includes the price of the car, dealership fees, registration fees, etc. and then you pay back in monthly installments for a specific loan term. It can be the best way to finance your car if your savings isn’t good enough to pay upfront or make a down payment to purchase your car. However, in order to qualify for a zero down-payment car loan, you must have a good credit history among other things.

Pros and Cons of a 100% Finance For Car Loan

Like any other form of car finance, a zero down-payment for a car loan also has its own merits and downsides.


Advantages of 100 percent finance include:

  • Enables you to drive your car without making any payment
  • Potential to improve your credit score if you make prompt payments throughout the loan term

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The downsides for not making any down-payments may include:

  • Interest Rates Are Higher: Not making a down-payment usually results in you getting higher interest rates as compared to what you would have been offered if you make a down payment
  • Loan will cost more: your loan will essentially cost more with this type of car finance because of the total interest you will be paying by the end of the loan term
  • Monthly payments are higher: one of the advantages of making a down-payment is that it reduces your loan hence in effect reducing your monthly payments. However without a down payment, your loan is high and interest rates are also high hence you may end up making higher monthly payments.
  • Negative Equity on your car loan: you may end up owing more than the value of the car.
  • You may not qualify for zero down-payment car loan if your credit score isn’t good enough.

How To Qualify For A 100% Finance For Car Loan 

Here are a few tips on how to qualify for this type of car finance.

  • Improve your Credit Score: lenders usually offer this type of financing to persons with an excellent credit score. Hence if your credit score and history isn’t good enough, ie. 680 or more, you may want to improve upon it before applying. The higher your credit score, the better your chances of being approved and offered lower interest rates as well. However, you may end up getting higher interest rates if your credit score enough good enough hence making your loan cost more.
  • Trading in your existing car: another way to qualify for this type of car finance is by trading in your existing car if possible. This helps to reduce your loan hence increasing your chances of getting approval with good good terms.
  • Cosigner: you can qualify for a zero down-payment car loan by applying with a cosigner with a good credit score if your credit score isn’t good enough. This helps you get lower interest rates than you would have got if you applied alone.

READ ALSO: How Does A Car Finance Work?


Although you can decide to go in for this type of car finance, the downsides that comes with it is far more than the positives. Hence the best thing to do if you wish to finance your car is to have a good credit score and make a down payment if you can.

The larger the down-payment, the lower your loan hence resulting in you getting lower interest rates and monthly payments. Or you should also consider trading in your existing car with good value in order to reduce the cost of your loan.

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