Consumer Car Buying Advice Blog

Down payments are not only necessary but a large one can mean the difference between a denial and an approval for a bad credit auto loan

Credit repair and car loans

If you have bad credit and you’re hoping to finance your next vehicle with a bad credit car loan, one of the questions you may have is how much of a down payment you’ll need. We’re familiar with this, because at Auto Credit Express we’ve been working with poor credit customers for more than two decades.

After seeing the embarrassment and frustration that people with bad credit usually face, we constructed a web site with a bad credit auto loan application that matches up applicants with local dealers that specialize in second chance auto loans.

The alternative, buying a car from a tote the note dealer, has its drawbacks since this won’t do anything to get you out of the bad credit rut that you may currently find yourself in. It can also result in a greater risk of repossession – something you don’t want to happen.

That being said, how do you begin the credit repair process?

The down payment

The key to successful credit repair is being aware of the requirement of just about all bad credit lenders that you come into the loan with a down payment in the form of cash or trade equity.

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

Look at it this way: with little or no money invested in a car, especially during the first half of the loan when more is owed on the vehicle than it’s worth, it’s much easier for a customer to walk away from the loan. But with a large down payment involved, that same customer would be more likely to keep making payments.

Also remember that a large down payment can help in two different ways:

•    It lowers the monthly payment. The larger your down payment, the lower the monthly payment will be.
•    A down payment can also be used to shorten the loan term. Instead of lowering the monthly payment you can decrease the time in which the car is worth less than the payoff – what is known as “negative equity.”

No matter which option you choose, a down payment will reduce the total amount of interest that you’ll pay. This is especially important when you consider the higher interest rates associated with a bad credit auto loan.

The Bottom Line

Whether you are considering a regular car loan or a bad credit auto loan the results are the same: a down payment helps reduce interest expenses and allows you to trade out of your car sooner.

If you have bad credit, remember that Auto Credit Express has helped thousands of people with bad credit buy cars and reestablish their car credit at the same time. Our nationwide network of affiliate dealers specializes in bad auto credit.

So if you are serious about getting your car credit back on track, you can begin the process right now by filling out our secure online bad credit car loan application.

Tags: Bad Credit, bad credit auto loan, bad credit car loan, Credit Repair

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