One of the many questions from customers we get here at Auto Credit Express is "how much they need for a down payment on a bad credit car loan". The truth, it varies based on many variables and here we will explain why.

What is a Good Down Payment on a Car?

A good down payment amount is relative to the sale price of the car and depends on your credit score, or credit rating. If you're looking to place a larger down payment on a car loan, it may help solve some of the credit issues if you have bad credit. Most experts suggest you place at least 20% down on a car when you purchase it and never go below 10% unless you financially have to.

For a brand new car the required initial payment, or cash due at signing, is usually predetermined. Instead of paying as much down as possible, most lease customers should just stick with the required cash due at signing.

For a used car you generally will want to put at least 10% down or more on the vehicle's sale price. A lender may require more money down on a new car than a used car to help offset any depreciation it may incur.

Bad Credit Car Loan Down Payments

If you have bad credit, poor credit, or even no credit you should expect to have a minimum down payment of 10% or $1,000 down for your car, whichever is higher. If you're trying to get a high risk auto loan you may even have to have a higher down payment, closer to 20% of the sale price.

If you're not sure where your credit stands, you can get your credit score here. Take a look at some of the common sales prices for cars and how much of a down payment you’ll need with bad credit:

Sale Price


Est. Down Payment



$500 ($1,000 with bad credit)













Where Does the Down Payment on a Car Go?

Putting money down on a car, whether good or bad credit, has advantages. The larger the down payment typically means you’re paying less each month towards the car and in some cases you’ll get a better interest rate. The general rule of thumb is that you’ll drop $20 on your payment for every $1,000 you put down on a car but this isn’t always the case and every loan and situation is different.

A down payment is primarily used to offset any depreciation that the car my incur as soon as it is driven off the lot. If you don’t use a down payment on your car loan then you’ll instantly be paying more than the car is worth once you add in all the fees, tax, and other costs which puts you underwater on your car loan right away. When you have equity in your car it gives you quite a bit of flexibility in the future if you were to trade it in.

The Bottom Line

If you don’t know which credit tier you fall into, it’s a good idea to plan for a 10% down payment when you talk to a dealer, even if you qualify for zero down. The down payment can help you reduce your monthly payment as well as cut down on interest expenses. Keep in mind you will also need to budget for the initial car insurance purchase with your 10% down for a car.

To help our bad credit car buyers, Auto Credit Express has partnered with many local car dealers throughout the USA and in many major metro areas. We match our car buyers with a local dealer near them that knows how to handle bad credit or even just troubled credit situations. There is no obligation and no cost to request an auto loan through our form. You’ll simply be matched with a dealer near you if you meet the requirements. Stop waiting for your credit to be perfect and take action today.