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What to Do When You Can’t Raise the Down Payment on a New Car

Posted by Jane Clothier on 16 September, 2015


It’s a common conumdrum.  You’re in the market for a new car, but you won’t have the money to purchase it until you sell your current car. The problem is that you can’t possibly sell your current car before you buy the new one, because you need it. That’s the first problem.


The second problem is this. While you’re more than able to afford the monthly repayments on the car finance (and we’re assuming that you are able to), you haven’t got a handy stash of cash available to make the down payment on that new car.


Yes, we know – everyone should save up for the deposit in advance. We all know that, but sometimes circumstances change, and the new car needs to be bought now, rather than in 6 to 12 months’ time.


If you find yourself in this situation, what are your options for raising that down payment? First, you could consider using a credit card to make that initial payment. This answer is the most convenient, as we’re all used to making major payments and repaying the credit card company month on month. It offers the easy way out of a crisis, and alternatively allows you to make a major purchase at short notice.


The flip-side is that not all car finance companies or dealers will allow you to do this. When paying by credit card, you’re borrowing the money from another source, whereas they’re basing their finance approval solely on the outstanding balance. Some companies don’t like you to be borrowing the full amount, as it doesn’t suggest you have a stable financial background.


However, it varies from company to company. Some will refuse, while others may place limits on how much you can charge against the card. Whichever approach suits you, make sure that you’re able to afford the credit card repayments, which usually attract a higher rate of interest than the car finance. The best way is to commit only to an amount that you can pay off in a matter of months.


Better options include trading your current car in at the dealership. It may not raise its full value, but it might cover that down payment. This, of course, limits your finance options to dealerships, meaning you may not be receiving the most attractive deals either.


You could also look at raising the down payment privately, by asking friends or family. You could then pay that loan back in a few months, without being bound to high interest rates, or risking your credit rating if you fall short one month. Doing this might open up a lot of more attractive car finance deals in the short term.


Another option is to wait and save – we just thought we’d mention it again, as it’s always a good idea, and returning to it might help you to think of an item you could sell to raise money. If this really isn’t an option, talk to us at 1800 Approved. As a motor finance company, we have contacts throughout the industry, and may be able to help find the car purchase to suit you.