When you need a vehicle fast, the commercials you hear on the radio and television talking about "no money down" car loans may sound tempting. The truth is, though, that there's always a catch. It's typically mentioned in the fast dialogue at the end, or listed on ads in print so small that it can't be read. The biggest thing standing in your way if you have poor credit is that these deals are generally for "qualified buyers" only.

So, who's a qualified buyer, you ask? That depends on the the lender.

Qualifying for a No Money Down Car Loan

Qualifying for a no money down deal usually means having excellent credit. According to FICO, excellent credit is a score of 800 or better (FICO credit scores only go to 850). If you're in this boat, then there’s little standing in your way of getting an auto loan with no money down. But, only about 20 percent of the US population has this exceptional credit. So, if you're in any of the other credit brackets, you may not qualify for the best deals – but you're not alone.

If you have poor credit, you typically need a down payment on a car loan. The exact amount varies by lender, but you’re usually required to put down $1,000 or 10 percent of the vehicle's selling price, whichever is less.

Used Cars Can Save You Money

Shopping for a No Money Down Car Loan? Why a Used Vehicle May Be Your Best ChoiceThat being said, if you can't qualify for a no money down car loan, focusing on a reliable used vehicle may be the way to go. Used cars are often more affordable than financing a new one, and you may not need as large of a down payment.

Another reason it may be cheaper to finance a used vehicle is that used cars have already seen their steepest drop in depreciation. So, there's not as much cash needed to cover the gap between vehicle’s actual cash value and the amount financed.

If saving money to make a cash down payment is your worry, you can also use trade-in equity, or a combination of cash and trade equity, to meet the down payment requirement. If there's enough equity in your current car, you may not need to use any cash at all. As long as you're not upside down, you can use your trade-in. You can also sell your vehicle privately, and use the profit toward your down payment.

The Bottom Line

If you don't have the credit score necessary to qualify for a no money down auto loan, you're not alone. You shouldn't give up hope on getting a car loan altogether, though. At Drivers Lane, we can direct you to dealerships that have the lending resources to work with people in many challenging credit situations. Just fill out our easy and free auto loan request form to get the process started right now!