Yes, it is possible to get a bad credit car loan and just make a down payment of $ 700. The key is to work with the right lender and choose the right vehicle. You have a much better chance of getting a car with a $ 700 down payment from a subprime lender because their down payment requirements are quite straightforward and they offer loans for borrowers with bad credit. If you’re curious about how to get an auto loan with a down payment of less than $ 1,000, read on.
Down payment requirements for subprime lenders
Down payment requirement varies by lender, but the general standard for subprime lenders is $ 1,000 or 10% of the vehicle’s selling price, whichever is less. This means that you might only need $ 700 down payment if you choose a car that sells for $ 7,000, although you have the option of making a larger down payment if you wish.
There are three options to choose from for saving money:
- Recovery capital – If you have a vehicle that is worth more than the loan balance, it has equity. You can trade in the car and use the equity to meet the down payment requirement.
- Cash – If you don’t have a vehicle to trade in, you can use cash for the down payment.
- Combination – If you have a trade, but it doesn’t quite meet the down payment requirement, or you want to put more money in, you can add money to the equity in the exchange.
Keep in mind that if you have an exchange that has negative equity – which means he’s worth less than what you owe on his loan – you might not be able to trade him that easily. In this case, you may need to make up the difference between the actual cash value of the car and the loan balance in order to get approval.
Some lenders allow you to transfer negative equity into the new loan, but this is not recommended. The reasons are that this increases your new loan amount, making it more expensive in the long run, and you become even more upset about the new loan.
How a larger down payment helps
As we mentioned before, you can make the minimum down payment and probably be in good shape. But, if you have bad credit, we recommend that you save as much money as you can comfortably put. A 20% down payment would be great, but anything over the minimum helps.
Putting more money in helps you save money in the long run. Not only does this lower your monthly payment, but it helps you save money in interest charges. This is especially useful if you have bad credit and can only claim an above average interest rate. A higher APR makes the loan more expensive, but a larger down payment can help you fight this.
You can always choose to refinance for a better interest rate once your credit score improves and at least a year has passed since you took out your original loan. In the meantime, you can reduce the total cost of your loan by putting more money aside.
Ready to start?
The bottom line is this: You can make a down payment as low as $ 700 if it meets the lender’s requirements, but we suggest you put in more money if possible. If your down payment is ready to go, but you don’t have a dealer to work with, we want to help.
AT Auto Express Credit, we’ve been helping consumers find financing for over 20 years by connecting them with local specialty finance brokers. To get started, you just need to complete our free and easy car loan application form. After that, we’ll immediately get to work to put you in touch with a dealer in your area.