It is entirely possible to take out a car loan without a down payment. In reality, a down payment will not affect your APR.
Making a down payment to purchase a vehicle can, however, have an impact on the acceptance of your loan application by the lending institution. It is clear that a bank will always favorably welcome the loan application of a borrower who already has the liquidity to pay part of the car’s price.
Financing all or part of the vehicle
It is entirely possible to finance only part of the vehicle and pay the residual value at the end of the loan contract. The residual value can range from 30 to 40% of the borrowed capital amount. Note that this formula is particularly interesting for people who need to change vehicles every 4 or 5 years. We will return to this very interesting formula in our next article.
Other important points for financing your vehicle
New or used car financing?
Car financing is a particular type of loan that follows specific rules. Thus, you can only purchase a vehicle registered in Belgium or Luxembourg. You must provide the purchase invoice, and your lending institution will pay the garage selling you the vehicle directly.
The APR is different depending on whether the vehicle is new or used. A vehicle is considered new up to 3 years after its first registration. The APR is lower for new vehicles. This pricing depends on the market.
Conditions for car loan financing without a down payment
There is no limit on the amount for car financing, and the repayment period is generally 4 to 5 years but can go up to 7 years in some cases.
Financing a used vehicle between individuals?
In Belgium, car financing is no longer accepted between individuals. In this case, the person buying a used vehicle from an individual must take out an installment loan. The APR is more favorable for car financing than for an installment loan because the vehicle sold by a dealer comes with the guarantees specific to professional sellers (some garages guarantee the used car for up to 4 years).
Important information on car loans without a down payment
When you take out a car loan to buy your car, you give yourself the opportunity to purchase the car even if you don’t have all the money.
You can use a car loan to buy a new or used car from a bank. It is a line of credit, and you will need to repay the bank within a timeframe and at a rate determined by the bank.
Differences exist between banks offering car loans, so it is useful to compare contracts between them. You can find the cheapest terms or choose the terms that best suit your personal situation.
Borrowing money costs money, so make sure to compare rates and get the lowest one. Knowing what you’re talking about will save you money.
Finally, Cpe crédit displays the current rates offered on our site. We periodically change the interest rate so that people can see where they might get the best car loan rate.