For those with a very good or excellent credit rating, zero deposit car finance (also known as "no deposit car finance") is an option which means you do not have to pay a deposit at the start of your finance agreement. The finance package will fund the entire cost of the vehicle.
Zero deposit car finance is mainly available to those with a clean credit history, as lenders will require more security from customers with a poor credit history or credit rating. In some cases it is available to those with a fair or poor credit rating, however the finance package is likely to be far more expensive than normal.
For those with a fair to poor credit rating, a deposit will help you obtain car finance at more favourable terms. It will also reduce the amount you have to borrow and the amount of interest you pay over the course of the agreement.
The main advantage of zero deposit car finance is that you do not have to pay anything up front. This can be appealing to those with limited savings who want to take advantage of a car finance package.
The problem is that for many customers, zero deposit car finance will not be available. Because it is mostly available for customers with a strong credit rating, it will be difficult to be accepted for a no deposit agreement if you have a weaker credit history. Zero deposit car finance agreements can also be more expensive, so you will end up paying more in the long run.
The big advantage of paying a deposit is not just that it secures your agreement, but it also reduces your monthly payments. A large deposit can make your monthly payments much more manageable. If you don’t have a lump sum to use as a deposit, you can part exchange an old car and use that as a deposit on your car finance agreement. Speak to your Customer Advisor for more information.
It may also seem like an advantage that you would not lose any money should you decide to cancel the deal. However, all FCA regulated companies provide a 14 day money back guarantee on all finance packages they provide.
If you require further assistance, our team of Customer Advisors are here to help. We're open six days a week - you can view our opening hours here - and we're more than happy to answer your questions.