The peak of the holiday buying season may not be the best time to buy a new car, but, for some, it cannot be helped if their current vehicle has become unreliable. What can you do when you need a car loan, but don't have the money for a down payment?

It's certainly stressful when you don't have a down payment because you have already allocated your extra money toward gifts for your kids, family and friends. You might be thinking that you'll be able to qualify for a zero down program, but that all depends on your credit rating. If you have damaged credit, or if you have overextended your credit lines during the holiday shopping frenzy, you could have difficulty getting approved for these types of offers.

A Down Payment Doesn't Always Have to Be Cash

If you are low on resources, there are a couple things you can do in order to cover a down payment without even having to touch your wallet.

down payment

  • How much value does your current vehicle have?
    Trading in your old vehicle could serve as part - or all, in some cases - of your down payment. Even if it has become unreliable, there may still be some value left in your car, and it doesn't hurt to check. Consult a website like kbb.com to see how much your car might be worth. But keep in mind that this price will vary based on location, demand, and actual vehicle condition.
  • Are there any rebates available?
    The holiday season is prime time for dealerships to offer rebates on new car purchases, and it is possible that these offers could be substantial enough to cover at least a portion of a down payment.

The Advantages of a Down Payment

A down payment will help you avoid having negative equity, which is especially beneficial if you are considering a brand new car, as they highly depreciate in value in the first year. A new car will lose at least 10% of its value as soon as you drive off the lot, and it could lose another 10% by the end of the first year. Because of this, you may want to consider a certified pre-owned (CPO) vehicle, as it will be less expensive and you won't take as much of an initial hit in value.

Also, a down payment will give the lender more incentive to approve you for the loan. If you have bad credit, a down payment may be the difference between car loan approval and a denial. So, although you've already used that holiday budget for its intended purpose, perhaps there are other areas in your budget that you cut back on in order to build up some cash for a down payment. As little as $500 may be enough to qualify you with a dealer and get you the car you need.

You Haven't Exhausted All Options

If you feel like you've run out of alternatives, turn to Auto Credit Express. We have a nationwide network of car dealers that have the experts who are ready to help. When you complete our fast and free online application, we can connect you with a local dealer that will do everything possible to get you back on the road. Don't let the lack of reliable transportation spoil your holiday plans, start today.