While it’s possible to get a no money down car loan in Sacramento, it's harder to qualify if you have bad credit. The fact of the matter is a down payment is typically required in order to get approved for a bad credit auto loan.
Down Payment Requirements for Bad Credit Auto Loans
There are many residents in Sacramento that need a bad credit car loan, but don’t know how to qualify for one. Basic bad credit auto loan qualifications include meeting the income and residence requirements set by the lender, but also include meeting the down payment requirement.
How much money you need to put down depends on the lender you’re working with. Each has their own minimum down payment requirement, and some may ask for more than others. Generally speaking, subprime lenders in Sacramento typically ask for a minimum of $1,000 or 10 percent of a vehicle’s selling price, whichever is less. So, if you pick a $5,000 car, you may only need $500 down.
If you go through a buy here pay here (BHPH) dealership, however, the down payment requirement can be different. The amount needed can vary widely by dealer because these places are all independently operated, but it typically depends on the price of the vehicle you choose.
Drivers Lane Tip: If you can, you should try to make a larger down payment when financing a car. While putting the minimum amount down helps you get approved, a larger down payment can lower your monthly payment and reduce the interest charges, making the loan more affordable.
Coming Up with a Car Down Payment
Now that you know you need to put money down, how do you come up with the amount needed? Luckily, you have choices – three of them, in fact:
- Cash – You can make the down payment by saving up and paying it in cash.
- Trade-in – If you have a vehicle that's paid off or has equity you want to trade in, you can use it as money down.
- Combination – If your trade-in doesn’t meet the minimum required, or you want to make a larger down payment, you can use cash as well as trade-in equity.
Drivers Lane Tip: If your trade-in has negative equity – meaning it's worth less than what you owe on the loan – and you want to use it as a down payment, you typically have to cover any negative equity in cash. Some lenders allow you to roll over negative equity into the new loan, but doing this doesn't eliminate the negative equity, it just means you end up paying for both loans at once.
Need Help Finding a Dealership in Sacramento?
A down payment helps you get approved and save money in the long run. Even consumers with good credit put money down on their auto loans, because they know it helps. Remember, there’s more than one way to come up with money to put down, and the more you put down, the better off you’re going to be.
No matter where you live in Sacramento, or anywhere else in California or the rest of the country, Drivers Lane wants to help you get connected to a dealership that can get you financed.
We connect car buyers to local dealers that know how to assist people in unique credit situations. To get started, fill out our free and easy auto loan request form, and we’ll get right to work for you.