When you need a personal loan, a mortgage, or a loan for a project that's important to you, releasing funds to create a down payment isn't always easy. To avoid this problem, lending institutions offer their clients loans without a down payment. What are the advantages and limitations of this option? How can you borrow without a down payment? In what cases is a down payment necessary?
Before granting a loan without a down payment, lending institutions examine the borrower's financial situation. The numerous conditions to be met can be classified into 3 categories:
a stable professional situation, ensuring regular income over time. In practice, this very often means a permanent employment contract (CDI) with several years of seniority to strengthen the application;
a comfortable amount of disposable income, allowing for a sufficient level of current expenses. By deducting loan repayments from income, the lending institution calculates disposable income. This must be sufficient to maintain a satisfactory standard of living once the loan without a down payment is obtained;
a flawless financial history, which reassures the borrower of their ability to meet their obligations. Successful repayment of previous loans and good account management in the past build confidence and increase the chances of obtaining a loan without a down payment.
Despite these undeniable financial advantages, it is sometimes preferable to take out a loan without a down payment. This is particularly true when the interest rates offered depend on the loan amount.
Example: 5% interest rate for an amount less than €10.000,00 or 3% for an amount greater than or equal to €10.000,00. The car buyer in the example above would then benefit from borrowing without a down payment if they want to take advantage of the reduced, decreasing interest rate.
It is also important to be careful not to draw too heavily on your emergency savings to make your down payment. Maintaining a minimum amount of available cash is essential to cope with unforeseen circumstances.
Example: making a €2000 down payment on a personal loan can be risky if it means completely emptying an emergency savings account. Conversely, it can be financially advantageous if, despite this down payment of With a loan of €2000, the borrower maintains a comfortable level of savings. However, it's important to note that DÃQ LAEN's unique feature is that it offers loans at a constant rate of 2%, regardless of the amount.