Yes, it’s possible to get a bad credit car loan and only make a $700 down payment. The key is to work with the right lender, and pick the right vehicle. You have a much better chance of getting a car with a $700 down payment from a subprime lender, since their down payment requirements are fairly straightforward and they offer loans to bad credit borrowers. If you’re curious as to how you can get an auto loan with a down payment under $1,000, keep reading.

Down Payment Requirements for Subprime Lenders

The down payment requirement varies by lender, but the general standard for subprime lenders is $1,000 or 10% of the vehicle's selling price, whichever is the lower amount. This means you may only need $700 down if you choose a car that sells for $7,000, although you have the option to make a larger down payment if you want.

You have three options to choose from when it comes to putting money down:

  1. Trade-in equity – If you have a vehicle that’s worth more than the loan balance, it has equity. You can trade the car in and use the equity to meet the down payment requirement.
  2. Cash – If you don’t have a vehicle to trade in, you can use cash for the down payment.
  3. Combination – If you have a trade-in, but it doesn’t quite meet the down payment requirement, or you want to put more money down, you can add cash to the trade equity.

Keep in mind that if you have a trade-in that has negative equity – meaning it's worth less than what you owe on its loan – you may not be able to trade it in as easily. In this case, you may have to make up the difference between the actual cash value of the car and the loan balance in order to get approved.

Some lenders allow you to roll over negative equity into the new loan, but this is ill-advised. The reasons why are because it increases the size of your new loan, making it more expensive in the long run, and you become even more upside down on the new loan.

How a Larger Down Payment Helps

Like we mentioned earlier, you can make the minimum down payment and probably be in good shape. But, if you have bad credit, we recommend that you put the most money down that you're comfortably able to. A down payment of 20% would be great, but anything above the minimum helps.

Putting more money down helps you save money in the long run. Not only does it lower your monthly payment, it helps you save money in interest charges. This is especially helpful if you have bad credit and can only qualify for a higher than average interest rate. A higher APR makes the the loan more expensive, but a larger down payment can help you combat this.

You can always choose to refinance for a better interest rate once your credit score improves and at least a year has passed since taking out your original loan. In the meantime, you can lower the total cost of your loan by putting more money down.

Ready to Get Started?

The bottom line is this: you can make a down payment as low as $700 if it meets the lender’s requirement, but we suggest putting more money down if possible. If you have your down payment ready to go, but don’t have a dealership to work with, we want to help.

At Auto Credit Express, we’ve been helping consumers find financing for over 20 years by connecting them to local special finance dealers. To get started, all you have to do is fill out our simple and free car loan request form. After that, we’ll get right to work matching you to a dealership in your area.