The true statement would be:
"Borrowers can obtain a loan without making an upfront payment."
When a loan requires no down payment, borrowers are not required to make an initial upfront payment or deposit of money at the time of obtaining the loan. This type of loan is common in certain situations, such as certain types of government-backed loans (like VA loans for veterans or USDA loans for rural homebuyers) or certain special financing programs offered by lenders.
Here are some characteristics of loans that require no down payment:
100% Financing: Loans with no down payment cover the entire purchase price of the asset being financed. This means borrowers can obtain the loan without having to provide any cash upfront.
Increased Accessibility: No-down-payment loans can make it easier for borrowers to access financing, particularly for those who may not have significant savings or liquid assets available for a down payment.
Higher Loan Amounts: Since borrowers are not required to make a down payment, they may be able to qualify for higher loan amounts, allowing them to purchase more expensive assets or properties.
Potentially Higher Interest Rates: Loans with no down payment may come with higher interest rates or other fees to compensate for the increased risk to the lender. Borrowers should carefully consider the overall cost of the loan before accepting this type of financing.
It's important for borrowers to carefully review the terms and conditions of loans that require no down payment and to understand any potential trade-offs, such as higher interest rates or longer repayment terms. Additionally, borrowers should ensure they have a solid understanding of their ability to afford the loan payments over the long term before proceeding with this type of financing.