How much deposit do I need for car finance?
The deposit amount needed can vary depending on the following:
- Your credit history and previous borrowing history
- The year of the car—is it new or used?
- The make/model of the car
- What you’d like your monthly repayments to look like
It is often recommended to pay a 10% deposit of the total cost of the car, but it depends on what you are comfortable with. The larger the deposit paid, the lower the finance amount, hence lowering the monthly repayments.
Reminder – You will have to pay interest on your repayments. Putting a larger deposit down will reduce the amount of interest you pay further down the line.
Is it easier to get car finance with a large deposit?
In most cases, providing a larger deposit makes it easier to secure car finance, as it reduces the lender’s risk—especially if you have bad credit. A bigger deposit can signal more trust to the lender, particularly if you have a poor credit score or have been turned down for car finance before.
If you have a good credit history and prefer to spread out your payments, you should still be able to find a suitable car finance deal with a standard 10% deposit.
In some instances, you may even be able to secure finance with no deposit, although this will result in higher monthly repayments.
Can I get a car on finance without a deposit?
Yes, you can absolutely get a car on finance with no deposit! However, while a deposit isn’t always necessary, it can make your car finance application more attractive to lenders and help reduce the total interest paid. You’re more likely to be approved for no-deposit car finance with a good credit score, but it’s still possible to secure approval even if your credit rating isn’t perfect.
Can I use my old car as a deposit?
If you already own a car and want to upgrade to a new one, you can use your current car as a deposit through a process called part-exchanging. This is simpler if you own your car outright. However, if you still have a car finance owing on your existing car and are looking for a new vehicle, refinancing could be another option.
With refinancing, the remaining balance on your current finance agreement is included in your new agreement. This is often offset by the part-exchange value however keep in mind that this may increase the overall cost, depending on how much you still owe.
If you own your old car outright, you can skip refinancing altogether. The dealer will evaluate your car’s value and apply it towards the cost of your new vehicle. Depending on the dealership, this amount may be deducted from your deposit or subtracted from the total price, which can make your monthly repayments more manageable. It’s a good idea to get a few quotes first to ensure you’re getting the best value for your car.