Vehicle Financing Without Deposit Is A Dream For Everyone

Living the dream is one thing, financing it responsibly is another. Thinking of taking the plunge and buying your dream car? Read our handy vehicle financing without deposit guide and let us help you make the right financing decision to make your dreams come true:

WP Motors is the home of zero deposit deals on the best second hand sedans, bakkies and hatchbacks in town; that doesn’t mean that putting down a deposit is not a wise financial decision for those who can swing it – hence, number 1:

1. Deposit

Pros:

• Reduce your monthly repayments on the car.
• Reduce the total amount of your car loan (if you’re financing your vehicle purchase with a loan from a bank or similar financial institution).
• A smaller loan means less interest accumulated on the loan.
• Often you can negotiate the value of the deposit to suit your financial means at the time.

Cons:

• Requires that you have a large lump sum of money available up front.

2. Trade-in

When buying a new car from a dealership you may be offered the option to trade in your old car against the value of the new car you’re looking to purchase.

Pros:

• Saves time when compared to trying to find a private buyer for your old car.

Cons:

• You may make less money off a trade-in than you would a private sale.
• You need to do your research beforehand, know the value of your car, and you may have to haggle with the dealership reps in order to get anything near what you know the vehicle is worth.
• Any damage to the vehicle (aesthetic or mechanical) will drastically lower the trade-in value of the vehicle – so you may have to spend either time or money fixing the car up before you offer it up for a trade-in.

3. Balloon payments
   

A balloon payment is essentially the inverse of an up-front deposit. Opting for financing that comes with a balloon payment then allows you to get vehicle financing without deposit! A balloon payment is a lump sum payment made to the bank/lender at the end of the loan repayment term and represents the outstanding balance on the vehicle/loan.

Pros:

• Opting for a balloon payment allows you to decrease the value of your monthly repayments as you increase the value of the balloon payment (that you will owe at the end of the loan term). I.e. you can manipulate the value of the residual.
• You don’t need to put down a deposit on a vehicle financed by a balloon payment option.
• You can sell the car at the end of the loan repayment term in order to cover the value of the balloon payment.

Cons:

• You pay more interest on your loan as the capital amount does not decrease as quickly when the bulk of the loan is represented by the balloon payment that doesn’t get paid off until the end of the loan agreement period.
• You may need to trade-in or sell your vehicle in order to finance the balloon payment at the end of the loan repayment term. (Should you opt to trade-in your vehicle, the balloon payment’s value is subtracted from the trade-in value of the vehicle).

Call WP Motors today to discuss your options!