How Much Should I Save for a Down Payment on a Bad Credit Car Loan?

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.


, - August 1, 2019

How much money you should save for a down payment depends on a few different factors, including where you plan to finance the car, the vehicle you choose, and the available funds you can use. In addition, lenders that work with bad credit borrowers have specific down payment requirements you must meet, so deciding how much you should save could take some prep work.

Bad Credit Car Loan Down Payment Requirement

Because you’re dealing with bad credit car financing, you’re usually going to be required to make a down payment. It doesn’t matter if you go to a special finance dealership that works with subprime lenders, or a buy here pay here dealer that’s also a lender – you're generally required to put a certain amount down.

Here’s what these two types of lenders typically require for a down payment:

  • Subprime lenders – The minimum amount required varies, but most expect you to make a down payment of at least 10% of the vehicle’s selling price or $1,000, whichever is less.
  • Buy here pay here dealerships – How much you need to put down depends on the car you choose. This means you may only need $500 to $1,000, or you could be asked to make a down payment that’s over 20% of a car’s selling price.

CarsDirect Tip: Although putting the minimum amount of money down gets the job done, we recommend that you make a larger down payment if you can. By doing this, you save more money on both the monthly payment and total interest charges. Because you’re likely going to get a higher than average interest rate if you have poor credit, the more money you put down now, the more you save throughout the loan term.

How to Come Up with the Down Payment

Now that you have an idea on what the minimum required is for the down payment, how do you come up with a sizeable one? First, you need to know what your down payment options are. These include:

  1. Using cash
  2. Trading in your vehicle as long you have equity in it or it's paid off
  3. Using both cash and your trade-in

From there, you can choose the option that best suits your financial situation, and determine if you should put more than the minimum down. To get a better idea of what your auto loan could look like with different down payment amounts, use our car loan calculator. You can see an estimated finance amount based on the information you provide, and can even view vehicles that fit within that payment range.

The Bottom Line

Making a down payment allows you to save money on the overall cost of the auto loan and lower your monthly payment. If you can, try and make a larger down payment to help your chances of getting approved if you have bad credit. Remember, you have options, and you don’t have to only use cash.

When you have your down payment amount ready and feel confident in taking the next steps, CarsDirect is here to assist. We help consumers find financing by connecting them to local dealerships that work with unique credit situations.

Getting started is easy. Just fill out our free and quick auto loan request form and we’ll get right to work for you!

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.


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