With the increasingly competitive economic situation in the world, loans have now become a staple for almost everyone. That being said, there are now several options that make the concept of deposits look like a thing of the past. For many years, the sector of vehicle loans has remained an exception to the same. However, this has now been changed with the availability of no deposit car finance options, which allow users to enjoy the benefits of a vehicle loan without providing any form of collateral or deposit beforehand.
Though this seems like something that is too good to be true, it is now a very popular trend among lenders. Here is all you need to know about securing a no-deposit loan for your car purchase.
Table of Contents
Why Deposits Are A Bother
In many cases, the vehicle’s service providers demand a security deposit of at least ten per cent of the total price of the vehicle. This percentage varies greatly depending upon the lender and other associated factors. This might not be very feasible for a major sector of the population that applies for said vehicle loans. Even if they did settle the initial sum of money, they would face critical issues during the repayment period, which often results in very adverse happenings.
The typical plans used for car loans with deposits are of two types.
- Hire purchase plans, which are just like your traditional loan offered by your local bank,
- Personal contract plans are more similar to leasing schemes, which makes them easier to acquire.
How Does A No Deposit Loan Work?
In simpler terms, a no deposit car loan is something that more likely allows the user to borrow the entire amount required for purchasing the vehicle, all on one occasion. This beats the general default process of an initial deposit, followed by monthly payments, and completed with a balloon payment.
Though these loans require no form of collateral security or deposit, they still require the applicants to fulfil a few basic criteria for which they are screened. The basic checklist, which is definitely required to be fulfilled, is as follows.
- Excellent credit ratings
- Regular, stable income
- Car value and book value match precisely.
- Income surplus for loan repayment
- applying with a high LVR loan option.
A loan value ratio is a unit that helps you compare the maximum amount provided by the lender with that of the book price of your chosen vehicle.
Applying And Securing Your No-Deposit Car Loan
The application process for this loan is fairly simple. However, it is highly recommended that you go through extensive articles and information regarding the same before picking out your suitable plan. You will have to check with several different service providers about the loans they are open to providing, the associated percentages, loan period, repayment details, and more.
Application
The first step to acquiring a no-deposit car finance loan is to fill in all your details in the form given by the firm or service provider. These details will then be run across the panel available, and then there will be a list of possible choices which will be provided to you, curated specifically to suit your needs.
Choosing your Lender
From the available options, you will then have to choose a loan that perfectly matches all your specifications while providing the best possible benefits with regard to your vehicle of choice. The loans and percentages applicable for the specific car are subject to variation in accordance with even the slightest detail. Hence, it is very important to check across multiple sources to see how each feature is supposed to affect your overall loan as such.
Approval
After choosing your vehicle and the desired loan, you will simply have to wait for your application to be approved. The approval process should not be too hard, provided you fulfil all the basic requirements without trouble. After the final checks, you will then be allowed to get your hands on your car.
Conclusion
To wrap things up, the availability of car loans without any deposit is definitely a benefit. The availability of no deposit loans serves as a blessing for many customers who find it difficult to secure a huge amount of money to be provided as collateral for the loan amount. However, it is still very important to take your time exploring your options and make sure that your lenders are reliable before actually applying for their services.
