No money down car loans can be hard to come by, especially if your credit isn't the best. Even though getting a no money down auto loan might sound like a good idea, it usually costs you more in the long run. If you're looking for a no money down car loan in the Phoenix area, you might want to reconsider making a down payment, especially if you have bad credit. Read on to find out why.

What No Money Down Really Means

No Money Down Car Loans in PhoenixNo money down. Zero down payment. Sounds great, right? The problem is that auto financing with this perk in Phoenix is typically only reserved for people with excellent credit. If your credit isn't great, you're going to end up paying a lot more than you bargained for by taking that great zero down deal.

This is because if your credit isn't above 700, you're going to be looking at a higher interest rate. In fact, your APR could reach double digits sooner than you may think. According to Experian, the average interest rate on a used car loan was 10.91 percent for borrowers with credit scores of 601 to 660 in the fourth quarter of 2018.

When you take out a loan, you have to pay to borrow the money. This is what your interest rate is. It's the rate you're paying for the loan, and you pay interest on what you borrow. If you don't make a down payment, you're financing 100 percent of the loan, which means you end up paying interest charges on the whole thing.

Saving Money with a Down Payment

When you make a down payment, you're only paying interest charges on the amount you finance, which means savings for you – even with the higher interest rates you're likely to have with poor credit.

If you're using a subprime lender to finance a bad credit car loan, they typically require that you make a down payment of $1,000 or 10 percent of the vehicle's selling price, whichever is less.

If you want to do yourself the most good in the long game, a 20 percent down payment is recommended. Not only does it save you in interest charges, it helps you to get your car into an equity position quicker. A larger down payment can also help lower your interest rate in some cases.

Let's look at the difference a down payment can make if you're financing an $8,000 used vehicle for 48 months:

 Amount Financed 

 Interest Rate 

 Monthly Payment 

 Interest Paid 

 Total Paid 

$0 Down






10% Down ($800)






$1,000 Down






15% Down ($1,200)






20% Down ($1,600)






As you can see from the chart above, even using a standard $1,000 down payment can save you over $600 in the long run. When you use a 20 percent down payment, you save $1,176 – provided the interest rate is also slightly reduced.

Find the Savings You Need

Rather than driving all over Phoenix along Van Buren or Camelback looking for a dealership that can get you zero down financing, why not let the experts at Drivers Lane find you a dealer that has lenders available to work with people in bad credit situations?

Our process is easy to get started, and there's never any cost or obligation. Fill out our auto loan request form now, and we'll get to work connecting you with a local dealership in the Phoenix area today!