What’s the Lowest Down Payment Needed for a Bad Credit Auto 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.


, - November 6, 2019

When you’re dealing with bad credit, a down payment is something you typically need if you want to get approved for an auto loan. As for how much you need, it varies by lender. However, as long as you meet the minimum down payment requirement, you’re on your way to qualifying for a bad credit car loan.

Minimum Down Payment Requirements

How much is needed for a down payment depends on the lender you’re working with. If you have bad credit, you more than likely are going to be working with a subprime lender or buy here pay here (BHPH) dealer. Both tailor loans to consumers struggling with credit issues, but have different qualifications that need to be met – one of them typically being a down payment.

Generally, subprime lenders require a minimum down payment of $1,000 or 10% of the vehicle’s selling price. They accept the lower of the two. So, it may be possible to qualify for a down payment as low as $500 if you were to borrow $5,000. However, you should strive to make the largest down payment you can comfortably afford to save money in the long run.

For BHPH dealerships, the down payment requirement is different. They offer loans in-house – meaning they’re also lenders – and their money down requirement is often based on the price of the car they're selling you. This makes it much more variable than what subprime lenders ask form.

Coming Up with a Down Payment

Now that you know the usual minimum down payment requirements, how do you come up with one? You have three options:

  1. Cash – You can use cash and pay out of pocket.
  2. Trade-in equity – If you have a vehicle with equity to trade in, you can apply it toward the down payment.
  3. Combination – If your trade-in doesn’t cover the minimum required, or you want to make a larger down payment, you can use cash on top of the equity in your trade-in.

CarsDirect Tip: A larger down payment helps lower the overall cost of a loan, and decreases your monthly payment. Making one is especially important if you have bad credit and can only qualify for a higher than average interest rate. The bigger the down payment, the more you save in the long run.

Ready to Get That Car Loan?

You usually have to make a down payment on a bad credit auto loan. Luckily, if you work with the right lender, you may not need a large one to qualify. If you need assistance finding that right lender, we can help.

At CarsDirect, we're teamed up with a nationwide network of dealers that know how to handle unique credit situations, and we want to connect you to one in your area. All you have to do is complete our free, no-obligation car 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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