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No Credit No Money Down Car Loans to Afford a New Vehicle

Many people wonder if they can get no credit no down payment car loans for a new vehicle. dealers collect some money down to lower their risk in case of defaults. They also do so to get a little cash profit at the time of the sale itself. With a down payment amount the dealership can have liquid funds to finance the business.

 
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Nashville, TN -- (SBWIRE) -- 10/23/2012 -- Why do many dealerships charge money down up front? The dealers have a twofold reason for this. They are interested in realizing some of the profit of the sale immediately to fund their business. The other reason is to lower their risks. A lower principal amount loan decreases their money loss in case they have to repossess the vehicle. there have been many cases where the borrowers have bought a vehicle with no credit no down payment car loans which they cannot afford and run into default. In such cases the loss to the dealer is higher. Since the vehicle has depreciated the dealer loses on the resale value of the car too.

Most car buyers make the mistake of not exploring their bank or car financing companies for no credit no money down car loans before they visit the dealer. They have a bad credit situation and no savings in the bank. They feel the only chance to own a new vehicle is to finance their cars with the dealership they buy their car from. This results in a higher principal amount and expensive finance charges and transaction fees that the dealer or auto lender is bound to charge.

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It is common knowledge that most of the new cars in the dealer’s lot have a significantly lower invoice value. However, the dealer has marked up the price to increase the profits on the sticker price. The invoice value of a car is what the dealer pays the car maker or the amount paid to a previous owner of a used car. When people with no credit no down payment car loans need car finance the dealers charge an interest rate several points higher. This causes the car owners’ payment to increase as much as they spend on gas every month.

The auto industry has grown over 200 per cent in the recent years. with this the number of auto financers has also increased. These financial institutions and lenders offer a much lower interest rate. their car payments are affordable to people with no credit no money down car loans situations. Instead of over spending they save on their monthly budgets. One of the reasons the guaranteed car loans have become popular is that they approve an amount with professional opinion on what the car buyers can afford. Potential car buyers need to explore this avenue before they visit their local dealerships on the corner.

Even if it is possible to buy car with no money down, having saved an amount for the car purchase can allow car buyers to put some money down. Doing this will help save on the interest rate as well as lower monthly payments. Car buyers should note that what price they negotiate and the terms of the car finance will decide their monthly car payments. In the past no money down car loans was not available to people with bad credit. Increased competition has led to no credit no money down car loans being made available at affordable interest rates and monthly payments.

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