You usually have to make a down payment when taking out a bad credit auto loan. While that may not be what you want to hear, the reality is that putting money down helps you save money on your loan in the long run. You typically have three ways you can make a down payment: cash, trade-in equity, or a combination of both.

Down Payment Requirements and 3 Ways to Make It

3 Ways You Can Make a Down Payment on a Bad Credit Auto LoanThere are many different requirements you need to meet in order to get approved for a bad credit car loan. One of these generally includes making a down payment. The minimum amount of money down required depends on the lender and your situation.

If you’re going through a subprime lender that works with credit-challenged consumers, the typical minimum down payment requirement is at least $1,000 or 10% of the vehicle’s selling price, whichever is less.

At buy here pay here (BHPH) dealerships, another type of lender that works with bad credit borrowers, the money down requirement usually depends on the price of the car you choose. This typically means it's a lot more variable compared to a subprime lender.

As for coming up with the down payment, you’ve generally got these three options:

  1. Cash – You can pay cash up front.
  2. Trade-in value or equity – If you have a vehicle to trade in that's paid off or has equity, you can apply it as money down.
  3. Combination – If your trade-in doesn’t cover the minimum down payment, or you want to make a bigger one, you can add cash on top of your trade-in.

If you're trying to put yourself in a better position before taking out your loan, you may be able to improve your credit score and save for a down payment at the same time by taking out a credit builder loan. If you want to learn more, check out this credit building loan offer from our trusted partner here.

How a Larger Down Payment Helps

We usually recommend that bad credit consumers make the largest down payment they can comfortably afford. It can be hard to spend the money at first, but you may think it's worth it once you see just how much you can save overall.

Here's an example to see this in action. Let's say you're financing $12,500 for 60 months with a 15% interest rate, and you have a trade-in worth $2,000 and the lender is asking for $1,000 down.

This is how different down payment amounts affect your auto loan:

  Down Payment 

  Monthly Payment 

  Interest Charges 

$1,000 (minimum)



$1,250 (10%)



$2,000 (trade-in)



$2,500 (20%)



The numbers don’t lie. If you make a larger down payment, you lower your monthly payment and save in total interest charges.

The Bottom Line

You don’t have to just pay cash to make the required down payment. You have options available. If you can, don’t settle for the minimum requirement – put the most money down you can comfortably afford to help yourself out in the long run.

When you have your down payment set aside and are ready to find a car loan, Auto Credit Express is here to help. We work with a large network of special finance dealers all across the U.S. that assist people who are struggling with credit issues.

Our service can match you with a dealership in your area, and it's free, easy, and there's never any obligation to buy. To get started, fill out our secure auto loan request form today!