Before getting a bad credit auto loan, you're going to want to gather as much information as possible on what kind of down payment you'll need and what kind of interest rate to expect. The two are interconnected, so you shouldn't be thinking about one without considering the other.
The team here at Drivers Lane is here to help you get the financing you deserve, regardless of your credit situation. We want to make sure that you factor the down payment and interest rate into your budget. Proper research means no surprises when it's time to find the right car for you.
The Case for Making a Down Payment
Saving for a down payment can be difficult on a tight budget, which makes zero down financing appealing. If that is your only option, Drivers Lane has lenders in our vast network who occasionally offer zero down contracts.
However, putting money down is the more beneficial way to go if you can budget for it. Having a down payment improves your chances of getting approved and it may lower your interest rate. It also shows the lender how committed you are to the purchase.
The down payment amount you need is based on a number of factors, such as your credit score. Generally, lenders are looking for between 10-20% of the selling price of the car. If saving up is going to be difficult, remember that you can also trade in your old vehicle to put towards a down payment.
Get a better idea of what to expect by using Drivers Lane's car loan estimator.
Don't Forget About the Interest Rate
Interest rates on a subprime auto loan tend to be higher than normal. You may be tempted to take on a longer term to keep monthly payments low, but that only means you'll be paying more in interest in the long run. Never fear, there are ways to keep your interest rate lower:
- Improve Your Credit Score: The higher your credit score, the lower your interest rate will be. See what you can do to better your credit rating before getting an auto loan.
- Have a Down Payment: You can sometimes lower your rate by paying money down. Generally speaking, the more you can provide, the better chance you have of lowering your interest rate.
- Make Payments then Refinance:: If you keep up with the payments on your loan, your credit score will improve over time. If it does, it may be possible for you to refinance and get a better interest rate.
Finding the Right Auto Loan
If you are serious about getting an auto loan, make sure to do your research first. Learn what kind of down payment you'll need and what kind of interest rate to expect. The team at Drivers Lane is here to help you get the financing you deserve. Get started today by filling out our free, safe and secure online application.
