Do I need a down payment to get a car loan?

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Unlike home loans, you don’t always need to have a down payment for a car loan. However, if you put down a deposit, it can make your approval process easier and reduce your refunds.

Most lenders offer a loan equal to the full value of the car, but you may come across some lenders who ask for a small deposit.

Here are some cases where this could happen:

  • You don’t have or have a bad credit history
  • You owe a lot of money on other loans
  • There is a specific policy by the lender which requires a deposit from you.

Why is a car loan deposit beneficial?

On any loan, the less you borrow, the less interest you will pay in the long run. It’s better to take out a $20,000 loan than a $30,000 loan simply because you’ll pay it off faster and pay less interest over the life of the loan.

Here are some benefits of having a car loan security deposit:

  • It increases your chances of approval
  • You can potentially get a lower interest rate
  • This can make it easier to manage your refunds.

While it’s beneficial to have a down payment for your car loan, it can take a while to save up and it’s not always doable. There are many car loans that require no down payment. So if you can’t pay a deposit, don’t worry – there are usually other options you can consider.

If you’re planning on buying a car soon, check out Mozo’s car loan repayment calculator to figure out how much you can afford within your budget.

^ See Mozo Experts Choice Personal Loan Awards information

Mozo provides general product information. We do not take into account your personal goals, financial situation or needs and we do not recommend any particular product. You must make your own decision after reading the PDS or offering literature, or after seeking independent advice.

Although we pride ourselves on covering a wide range of products, we do not cover every product on the market. If you decide to request a product through our website, you will be dealing directly with the supplier of that product and not with Mozo.

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