How big or small of a down payment you decide to make depends on your credit and the price of the vehicle you're financing. When dealing with bad credit, however, you generally can’t avoid needing a down payment. The good news is you don’t have to put a large amount down – but if you can, you should.

Down Payment Requirements

How Big of a Down Payment Should I Make on a Bad Credit Auto Loan?Down payment requirements vary by lender, but subprime lenders generally ask for a minimum of $1,000 or 10 percent of the vehicle’s selling price, whichever is less. Buy here pay here dealers, on the other hand, may ask for an even larger down payment. Depending on the vehicle you finance, you could be asked to make a down payment well over 20 percent.

With that in mind, how do you come up with a down payment? You have three options to choose from:

  1. Trade-in equity – If you have a trade-in that’s either paid off or worth more than the loan balance, you can apply its equity toward the down payment requirement.
  2. Cash – If you don’t have a trade-in, or one that’s worth less than the loan balance (upside down), you can use cash to cover the down payment plus any negative equity.
  3. Combination – If you have trade equity and cash, you can combine both for a down payment.

You don’t have to be stuck with just paying cash, which is great news if you have a vehicle you’re looking to trade in. Make sure it has equity before you decide to trade it in, some lenders allow you to roll over negative equity, but subprime lenders typically don’t.

How a Bigger Down Payment Could Help

Just how much of an impact does a bigger down payment have? Using our Auto Loan Monthly Payment Calculator, here’s how a bigger down payment could help save you money using these numbers:

  • Price of the car: $13,000
  • Interest rate (APR): 15%
  • Loan term: 60 months

  Down Payment 

  Monthly Payment 

  Total Interest Paid 




$1,300 (10%)



$1,950 (15%)



$2,600 (20%)



The Bottom Line

The bigger the down payment, the better off you are. You may be able to get a $500 down car loan, but you should aim to put down more than that. It may seem like a waste of money right off the bat, but the numbers show that you can save hundreds in interest charges if you make a sizeable down payment.

If you have a down payment ready to go, but you’re worried a lender is going to turn you away due to your bad credit, let us help. At Auto Credit Express, we connect buyers to local dealerships that are equipped to handle challenging credit situations. Save the time, hassle, and energy of trying to find a dealer that can help you on your own. Get started by submitting our free and secure car loan request form today.