When it comes to the down payment on bad credit car loans, there's no set amount that fits every situation. In subprime lending, there's always a minimum down payment requirement. It can vary from lender to lender, and depend on your own credit situation as well. We take a look at the average down payment made on a bad credit car loan so you can get a better idea of what to expect.

Average Down Payment on a Bad Credit Auto Loan

Average Down Payment for Bad Credit Car LoansThe minimum down payment requirement for a subprime auto loan is typically $1,000 or 10% of the vehicle's selling price. However, according to data collected from our dealership network, the average down payment consumers are making is just over $2,000.

When you have poor credit, it's to your benefit to make the largest down payment you can comfortably afford to. Not only does this lower the amount you have to finance, it saves you money in other ways over your loan term, as well.

For example, if you're the average consumer with our dealer network, you're likely financing around $24,000 with a loan term around 66 months. On average, these buyers get an interest rate around 13%, put $2,000 down, and/or get just under $3,000 for their trade-in.

Since we're focusing on the money down, let's look at the changes in a $24,000 loan with a 13% APR and 66-month term using differing down payment amounts:

  Down Payment 

  Total Loan Cost With Interest 

  Total Amount Saved 




$1,000 (minimum)



$2,000 (average)



$3,000 (trade-in)



$4,000 (minimum + trade-in)



$5,000 (average + trade-in)



Keep in mind the above situation is what it might look like if you were to use the average amounts according to our partner dealerships. As we know, every auto financing experience is unique, and the specific rates and terms you qualify for, as well as the amount of a down payment you're required or choose to make, vary.

The amounts we use in this scenario don't account for additional factors like taxes, title, or license fees, and could also vary depending on the additional fees and surcharges used at the dealer you work with.

Using a Down Payment to Your Advantage

Looking at the table above, you may *gulp* seeing the total financed amount. Remember, this is just an average, and it takes both ends of the spectrum into account – borrowers finance both more and less than that amount. There's nothing written that says you have to shell out that kind of cash for your next vehicle.

However, the down payment advice remains the same. The more money you can use up front, the more money you save in the long run. You can also increase the amount you save by paying extra whenever you can. The more you can pay ahead of schedule, the more you're going to see in savings on interest charges.

For instance, if a less expensive used car is more in your wheelhouse, you can use our car payment calculator to see how much you can save just by changing the amount you use as a down payment.

Let's take a look at what else using a larger down payment could mean for you:

  • Saves money – Making a down payment means reducing the amount you borrow. Borrow less, pay less overall.
  • Lowers payments – Borrowing less also decreases your monthly payment, even when your loan term stays the same.
  • May lower interest rate – Make a big enough down payment, and you may qualify for a lower interest rate by borrowing less.
  • You may qualify for more vehicles – You could open up a whole new selection of cars to qualify for with enough money down.
  • Can reduce negative equity – A down payment means you're borrowing less, and can reduce the time your vehicle has negative equity, which is when you owe more on the loan than the car is worth.

Turn Your Trade-In Into a Down Payment

Making a down payment doesn't always mean coming up with a few thousand in cash out of thin air. Saving your down payment is one of the things that often takes the longest when it comes to getting an auto loan.

If coming up with the cash is proving difficult, know that you can use a trade-in with equity to help you come up with the minimum required down payment, or to add to the amount you’ve already saved.

Having equity means that the vehicle is worth more than you owe on its loan. If you own the car outright, all of its value can be put toward your next vehicle. For a car with a loan, the equity is what’s used for your next purchase.

Right now may be a good time to take advantage of your trade-in value. According to dealerships we surveyed, the average trade-in price has increased in recent months to $2,860. The value of used vehicles is on the rise due to increased demand as more people are choosing to drive themselves rather than risk public transportation during the coronavirus pandemic.

Ready for Your Next Car Loan?

If you have a down payment at the ready, we want to get you started toward your next auto loan here at Auto Credit Express. By getting matched to a special finance dealer, you can skip the hassle of being turned down.

Our coast-to-coast network of dealerships is signed up with lenders that work with bad credit, no credit, and even bankruptcy borrowers. Let us help you get you started right now by simply filling out our free car loan request form.