No Money Down Bad Credit Auto Loans

No Money Down Bad Credit Auto Loans

One of the more popular internet search phrases is for "No Money Down Auto Loans"

At Auto Credit Express we’ve been working with consumers who are credit challenged for the last 20 years, and have learned along the way - that if you have bad credit, there are virtually no lenders remaining that offer a true "no down payment" auto loan program. There may have been a handful of lenders that did a few years ago, but the current economy put a halt to that.

This doesn’t mean, however, that cash out of pocket is the only form of down payment. There are two others: The first is trade value (where there is equity in the trade-in). Most auto loan programs allow trade value as a down payment in order to meet their minimum down payment requirements. Here’s how it works:

Let’s say that a customer has a high mileage vehicle with a blown engine. The vehicle has no value other than scrap, but the dealership appraises the vehicle, sight unseen, at $100. This customer then wishes to purchase a used car for $15,000 with no cash money down, but the lender requires a $1,000 minimum down payment.

The special finance manager will then structure the deal with a selling price of $15,900 and gives the customer $1,000 for the trade instead of $100. The net difference in the transaction is $14,900, which is the same as it would have been if the dealer had sold the car for $15,000 and had given the customer $100 for the trade-in vehicle.

The second type of down payment is rebates in the form of customer cash. Many lenders will allow customers to use a new car rebate in order to meet all, or a portion of, their minimum required down payment. Be sure, however, that the rebate is in the form of customer cash.

If you have bad credit, there are, for the most part, no lenders out there that will finance a vehicle without the customer having some kind of equity in the vehicle. At Auto Credit Express, our advice to consumers seeking bad credit car loans hasn’t changed since the beginning of the current recession:

• Know your credit score and what’s contained in your credit report
• Plan on coming into the loan with at least 10 percent down in cash or trade equity
• Keep the loan term as short as possible
• Buy a compact or midsize vehicle and put off looking at your dream car until after you’ve reestablished your credit.

If you have less than perfect credit, and need an auto loan, visit us at autocreditexpressvideo.com to find out how we can help.