In most cases, bad credit car dealerships are unable to get applicants with credit issues approved for a car loan with no money down. While there might not be a way out of needing a down payment if you’re looking for a bad credit auto loan, you can prepare a budget and do some research beforehand so you’re ready.
Budgeting for a Down Payment
A great way to get ready to finance a car is to save up for a down payment. Typically, subprime lenders ask for a minimum of $1,000 or 10 percent of the vehicle’s selling price, whichever is less. It may seem like you’re wasting money by making a down payment, but the reality is that a down payment is there to help you. To get ready to buy a car, here are two tips to keep in mind:
- Use online tools – Online calculators are great tools to help you budget for a down payment. Our car loan estimator can give you an estimate for an auto loan, but won’t include your down payment amount.
- Consider going above the minimum – While each lender’s requirements differ, it’s important to consider putting more than the minimum down. The more you put down now, the less in interest charges you’ll have to pay over the loan term. You could lower your monthly payments, pay off your car sooner, and reduce the time your vehicle is worth less than the loan payoff – called being underwater.
If you find that you can’t afford to put the minimum required down, it may be best to wait. You don’t want to run the risk of overpaying or pulling money from other important areas to cover a down payment.
The Bottom Line
A down payment is nearly always required when dealing with a bad credit auto loan. In fact, the only time you’ll be able to put no money down on a car loan is if your credit is excellent – and even that’s not guaranteed. Always keep in mind that down payments help you in the long run.
Speaking of helping, if you’re looking for a dealer who can help you get financing, let Drivers Lane take the lead. We work with an extensive network of dealers, including buy here pay here dealers and special finance dealers, that specialize in subprime auto loans. Don’t let your credit get in the way, get the process started with us today. Just fill out our simple online auto loan request form, and we’ll begin the process of matching you with a dealership in your area.
