No Down Payment Auto Loans

The fact is, one of the keys to successful credit repair is being aware of the requirement of pretty much all subprime lenders that you come up with a down payment in the form of cash or real equity in your trade in. In fact, the bigger the down payment, the less the car loan will cost you in the long run.

Many credit-challenged consumers look at a down payment as a roadblock in the way of their car loan. Most bad credit lenders, on the other hand, look at the down payment as a way to increase the likelihood that the loan will be paid off.

How Lenders Look At Bad Credit Car Loans

Lenders look at it this way: with little or no down payment auto loans, especially during the first half of the loan when more is owed on the vehicle than it's worth, it is much easier for customers to walk away from their obligation. If those same people had invested $5,000 of their own money in a down payment, they would be more likely to keep making payments.

And while most bad credit lenders don't usually require this much of a down payment, if you want a better-than-average chance of securing a bad credit auto loan, you should be prepared to put down anywhere from $1,200 to $2,000 either in cash or in real trade equity.

But whether you have bad credit or excellent credit, a down payment can help you in two different ways:

• It lowers your monthly payment. Every dollar you put down incrementally reduces your monthly car payment. The larger your down payment, the lower your monthly payment will be.
• A down payment can allow you to shorten the loan term. Instead of lowering your monthly payment you can reduce the length of the loan. By choosing a shorter loan term, you also decrease the "window" of time in which the car is worth less than the loan payoff – known as "negative equity."

No matter which option you choose, a down payment reduces the amount of interest that you'll pay. This is especially important with the higher interest rates of bad credit lender, but it also lowers the money you'll pay the bank even if you have good credit and you qualify for no down payment auto loans - money that might be better used for paying down your other debts or even buying that flat screen TV you've always wanted.

The bottom line is this: whether you are considering a regular car loan or a bad credit car loan the results are the same - a down payment helps reduce your interest expenses and will allow you to trade out of your loan sooner since you will have more equity in the vehicle to begin with.

Bad Credit Auto Loans Testimonials

We have 20 years of practice in special finance and work directly with special finance car dealers and the leading automotive financing lenders throughout all of North America. The knowledge and expertise we have gained through years of bad credit car loan financing enables us to give you the best assistance possible for your personal situation.