Can You Buy A Car Without Putting Money Down? in Jackson, MI

It seems that just when you desperately need to buy a car, you lack the finances for the required down payment. Auto dealers may be willing to overlook the cash up front, but in return, the interest rates may be higher.

Any amount of down payment is recommended because it lowers your monthly payments. Twenty percent is the best amount, but most people in 2015 put down about 10.4% due to the increasing costs of vehicles, according to Edmunds.com. You could put down even less, if you want, or buy a car with no down payment, but the fees and rates are higher.

Credit scores of 680 and higher give you the best chances of persuading a lender to waive your down payment without raising interest rates. Scores between 550 and 680 are considered subprime; the lender may waive the down payment, but it raises your rates. A score that is 550 and below may cause the lender to ignore you altogether.

Your first step is to straighten out your credit report by checking its accuracy, repaying your bills on time, keeping balances low on credit cards and paying off debt. Lenders lower interest rates for borrowers who have steady jobs or regular monthly income, who have lived in one place for at least a year and who have a credit record that shows they can meet their payments.

Another option is to get a family member or friend with a strong credit score to cosign. The person shares the responsibility of payment and ownership, but if you miss a payment, you lower your credit score and that of the cosigner, too. Although a cosigner has no right to the vehicle, there could be disagreement over who owns the car. Getting a cosigner only helps you lower your interest somewhat, since lenders realize that the car is usually for the person with the weaker score and typically offers an annual percentage rate (APR) that hovers around the median range. If you do get a cosigner, share the title ownership of the car, repay your loan on time and keep organized records to prevent disagreement.

It is possible to buy a car with no down payment, but you run a higher risk of being tagged with steeper interest rates. You can always buy a cheaper used vehicle or trade in your existing car, if you have one that's in good condition, since such steps usually lower your rate, too. In all cases, look for short-term loans that are less than 72 to 84 months long if possible.