Bad Credit No Down Payment Car Loans

Since you're considering bad credit no down payment car loans, you should know that there are several different sources where you can finance a vehicle with each having its advantages and disadvantages.

1. The first and most obvious source is the car dealer.
   • Advantages: Dealerships are convenient, fast, and often competitive rate-wise, especially if they are offering special low interest rates or car loans with no down payment on the model you are interested in through the manufacturer's captive finance company (i.e. GM Financial, Ford Motor Credit, Toyota Motor Credit etc.)
   • Disadvantages: It can be hard for you to be objective after driving that brand-new car that you are so excited about. In addition to financing, be prepared for a big sales push for add-ons such as rust protection and paint protection that are highly profitable for the dealer, but add little or no value to a vehicle's resale value. Also, many of the programs featuring car loans with no down payment are only offered to the "most qualified" buyers and you may not qualify for them.
2. The second source for bad credit no down payment car loans is either a bank or credit union.
   • Advantages: Credit unions typically offer competitive interest rates on car loans with no down payment to their members along with personal service. Many times a credit union loan will include GAP or credit life insurance at no charge. Neither will try to sell you any of the "dealer add-ons" and often they will inform you if they think you're paying too much for a car.
   • Disadvantages: If you haven't set up financing in advance, you may have to wait for them to open on Monday if you've picked out a new vehicle on a Saturday. They are also not as convenient and, typically, you will have to make a trip to their offices to sign the loan paperwork before going to the dealership to sign the title paperwork and turn over the check before taking delivery of your new car.
3. The third source for bad credit no down payment car loans is online financial sources known as direct lenders.
   • Advantages: Their rates are very competitive (otherwise why would you be doing this) and the process is typically very quick and easy.
   • Disadvantages: Unlike a bank or credit union, this is hardly what you would call personalized service. You also need to worry about sending someone you don't know your personal financial information. One more thing – beware of scammers looking to steal not only your identity, but also your money. Never pay a fee to submit a credit application.
4. A fourth source for bad credit no down payment car loans is a home equity loan or home equity line of credit.
   • Advantages: You can deduct some or all of the interest from your taxes, and typically these loans also offer competitive interest rates.
   • Disadvantages: Keep in mind what you'll be using as collateral. If you default on the loan, you could lose your home.