Realistically, if you have decent credit, it’s not unheard of to make a $500 down payment. If you’re dealing with bad credit, however, you should expect to put down more. At the same time, only a lender can truly tell you how big or small of a down payment you’ll need.

Is $500 Down Enough?

If you have good credit – a FICO score of at least 670 or above – you may be able to qualify for some perks such as a low (or no) down payment. This doesn’t always happen, however, and it’s subject to lender approval. Think about this though: even if you’re only required to put $500 down, is it enough?

Sure, $500 down may get you financed, but the value of a down payment can be so much more. Did you know that when you use a down payment lenders see it as a sign you’re committed to completing the loan? Or, that making a down payment of at least 20 percent of the vehicle's selling price can reduce the amount of time you have negative equity? Having a large down payment does all that and also reduces the amount you have to borrow, which can mean lower monthly payments and/or signing up for a shorter loan term. It also means less money paid in interest charges over time.

$500 Probably Won’t Cut It with Bad Credit

woman holding a carWhen your credit is suffering, a down payment will almost always be required, but you can’t go just anywhere to get approved if your FICO score falls around 640 or lower. Bad credit typically means you’ll need a subprime loan, which only comes from subprime lenders working indirectly through special finance dealers.

Though the specific amount will vary by lender and your situation, a down payment of $1,000 or 10 percent of the vehicle's selling price is usually required. The good news is that subprime lenders typically accept the lower of the two.

So, are you now thinking that if you get a cheap enough car, you can really lower your down payment amount? While this sounds good in theory, it doesn’t work out in practice. When you finance a bad credit car loan through a subprime lender, the minimum amount you can possibly finance is usually $5,000. Vehicles typically also have to be 10 years old or newer, with fewer than 100,000 miles on them.

That’s not a winning combination if you’re dead-set on putting no more than $500 down – which you shouldn’t be. Down payments can only help, especially if your credit is not on track. Remember, having money down shows a lender you’re serious and can make a difference between approval and denial on a loan. Not to mention, a substantial down payment bring long-term savings and equity benefits.

Find the Right Amount from the Right Lender

Only a lender can tell you how much money you’re required to have as a down payment. If your credit is in decent shape and you’ve found a great deal, maybe that’ll be $500. But if you’re troubled by credit woes and don’t know what to expect, let Auto Credit Express be your guide.

We work with a nationwide network of special finance dealers that have subprime lending specialists ready to help get you into your next vehicle. We want to guide you toward a local dealer that can work for you. It’s easy to get started today – just fill out our online auto loan request form now!