100% Car Finance Explained

One of the many terms or phrases you’ll come across when looking for bad credit car loans is 100% finance. You may wonder what that means and how it can help you. The experts at BadCreditCarLoans, have summed up the advantages and other things you need to know about 100% finance car loans.

100% finance or “no money down”

100% finance, also known as “no money down” or “nothing upfront” means your financier or lender is prepared to let you borrow 100% of the purchase price of the car without  a deposit or significant investment of your own money. If your prospective car costs $20,000, the lender will give you $20,000.

If you have bad credit and little savings, this can help you quickly. You won’t have to wait and save money for a deposit on a car or trade in a car you don’t have. If you urgently need a vehicle for whatever reason, 100% finance is a potential solution.

What that means long-term

100% finance means you must use your car as security, as you have no equity in the car yourself. Equity means how much you “own” the car compared to how much is financed. A security is also known as “collateral,” what represents the value your loan. If you are a responsible borrower and are always on-time with your payments, taking out a secured loan is a viable option. If you are not on time with your payments or go into default, your lender will repossess your car, as it’s the security on the loan.

Although secured car loan interest rates are generally lower than unsecured car loans, bad credit car loans are still subject to higher interest rates due to lenders taking on more risk.

Co-signing and other options

In some cases, people with bad credit can get a 100% finance deal if they have a co-signer, or someone who can vouch for them by “co-signing.” The co-signer must take responsibility for the loan if the borrower defaults, which makes it a risky option. Other lenders require people trade-in their car before they’re approved for 100% finance. One other option is a chattel mortgage, which is similar to a secured car loan. These products are usually reserved for business customers and are not regulated in the same way as consumer car loans.

Talk to a financial professional

Knowing the ins and outs of 100% finance may seem tricky if you’re new to bad credit car finance. Talk to one of our financial professionals to discuss your options with 100% finance and see if it’s right for you.


Written by Lewis Shaw

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