There are a number of tactics credit-challenged consumers can use to improve their chances of getting approved for an auto loan with little or no money down.

Car Loans with Bad Credit

car loans, down payment

Having been involved with subprime car loans here at Drivers Lane, we realize that most high-risk lenders will require a majority of borrowers with credit issues to come up with a down payment.

The typical down payment is usually ten percent of the selling price or $1,000, whichever amount is less. In most cases, the money down covers the state taxes plus license, title, and dealer document fees – with maybe some left over to reduce the actual selling price of the vehicle. Coming up with a down payment means borrowers won't be paying interest on those fees.

But for those borrowers hoping to get approved for a car loan with no down payment, there are a number of tactics that can be used:

  • A trade-in that’s either paid off or has equity (meaning it’s worth more than the amount owed) can be used to partially or fully satisfy a lender’s down payment requirements.
  • Choose a vehicle with a low loan-to-value (LTV) – the greater the gap between its selling price and its book value, the better the chances are of getting a lower down payment requirement.
  • Choose an affordable vehicle with a payment well below the lender’s maximum amount – the less expensive, the better the odds of securing a lower down payment amount.
  • At least six months before shopping for a vehicle, check your credit reports for mistakes. This will give you time to correct any errors and raise your credit scores – because higher credit scores mean your chances of a lower or even no down payment are better.

The Bottom Line

Although most subprime lenders will require a down payment, Drivers Lane has been helping credit-challenged buyers get auto loans for over 13 years. If you want us to help you find affordable auto financing, just fill out our fast and free online application.