There are times in life when your credit score is low yet a car purchase just can’t wait. Times, also, when you don’t have the cash at hand for a down payment.
It’s not ideal but, fortunately, there are lenders willing to help many consumers in this kind of situation move forward.
RoadLoans, an online, full-spectrum lender, is one of them. As every consumer’s position is different, we can’t offer a guaranteed auto loan for bad credit and no money down. We do, however, have great experience in working with customers who have bad credit,* and enabling them to finance a car with a low or even no money down requirement. And we may be able to do the same for you.
Before applying for or taking out a loan, it’s worth equipping yourself with some useful information so you can consider your options.
A trade in counts
Know that, if you currently have a car to trade, putting the trade-in value towards your purchase counts as a down payment. Look up your vehicle’s current trade-in value at sites like KBB.com and NADAGuides.com to see what you might get.
The difference a down payment can make
If possible, a down payment is worthwhile because it lowers the amount you need to borrow and reduces your total financing costs.
Twenty percent is widely seen as a healthy down payment on a car, yet even many buyers with good credit aren’t putting down that sort of money. The average for new and used cars is about 12 percent, according to Edmunds. Let’s see what sort of a difference that could make.
A car shopper has their eye on a used vehicle for $15,000, for example. With an eight percent APR, 60-month loan term and no money down, the total interest charge is $3,249, bringing the total cost to $18,249.
Adding a $1,800 down payment, however, drops the loan amount to $13,200 and the finance charge to $2,859 – a handy saving of $390. The overall loan cost is now just $16,059. What about the monthly payments? With no money down it would be $304, while $1,800 up front puts it at $268.
Even a small amount could help
There’s no written rule about what a down payment should be and, ultimately, it’s about what you can afford and what a lender will accept. Even a small down payment of $500, for example, may help secure a loan approval.
Low- and no-money-down financing with RoadLoans
At RoadLoans, we try to offer a number of options for consumers with poor credit and limited available funds for a down payment. Keeping in mind that each loan application comes with its own set of circumstances, someone with a FICO credit score in the range of 550 to 650 may be able to qualify for a down payment as low as $500, or sometimes zero money down. But remember, if approved for a loan, more money down might improve the terms, such as a lower APR.
Get a quick loan decision
See if you qualify for an auto loan online. Our short application takes a few minutes to complete and we provide instant decisions. If approved, you’ll receive multiple offers tailored to your needs. Simply select the best one and go shop for a car with confidence, loan voucher in hand.
Apply for a car loan online.
* “Bad” or “poor” credit generally is considered a FICO score around 600 and below by sources including the Consumer Federation of America and National Credit Reporting Association (reported by the Associated Press), Bankrate.com, Credit.com, Investopedia, NerdWallet.com and others. The Congressional Budget Office identifies a FICO score of 620 as the “cutoff” for prime loans. FICO scores are not the sole factor in lending decisions by RoadLoans.com and Santander Consumer USA.