It is entirely possible to get a car loan without a down payment. In reality, a down payment will not affect your APR.
Making a down payment to buy 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 a loan application from 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 amount of the borrowed capital. Note that this formula is particularly interesting for people who change their vehicle every 4 or 5 years. We will come back to this very interesting formula in our next article.
Other important points for financing your vehicle
Financing a new or used car?
Car financing is a special type of loan that follows specific rules. Thus, you can only buy a vehicle registered in Belgium or Luxembourg. You must provide the purchase invoice and your lender will pay the garage that sells 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.
The conditions for a car loan without a down payment
There is no limit on the amount for auto financing, and the repayment duration 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 a private 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 garage comes with the warranties of professional sellers (some garages guarantee the used car for up to 4 years).
Important information about car loans without a down payment
When you take out a car loan to buy your car, you give yourself the opportunity to buy the car without having all the money upfront.
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 have to repay the bank within a timeframe and at a rate determined by the bank.
There are differences between banks offering car loans, so it is useful to compare the contracts. 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 Credit displays the current rates offered on our site. We periodically update the interest rate so that people can see where they could get the best car loan rate.
