There are multiple ways one can go about financing a car, so it figures that there is not one set minimum amount one has to pay when it comes to vehicle financing. However there is a consensus.
The General Amount for Car Financing
If you visit your local bank for a car loan, the standard response you’ll likely hear back is they need you to need at least $5,000 before they let you take out a loan. It’s set so that the bank can make a decent return on interest on the loan for you to be worth their while.
But what if you don’t want to buy a $5,000+ car? We’ll there are other smaller loans one can take out, however the tradeoff often is that in return for a loan on a smaller sum of money, the interest rate is higher. Basically, like you thought, everyone is out for their pound of flesh.
When Your Poor Credit Score Is a Factor
There are other options besides banks or credit unions when it comes to lenders, however you’ll run into one general trend. For loans less than $5,000 dollars, the interest rate will rise to make up for the lenders lost profit. And that’s before you add factors like the rising cost of taking out a bad credit auto loan versus taking out one with a good credit score.
For example that one point something percent auto loan your credit union puts on blast isn’t going to do many American’s today much good if they don’t qualify. And in fact people who don’t qualify at a bank or credit union can quickly see rates pulling past 10-15% due to poor credit. Meanwhile, people trying to finance a car through dealers who work with bad credit can be looking at more than 20% or more financing.
So, even though you only intend to finance a car from a buy here pay here that might have a street value of $2,000, you’ll quickly make up the difference in interest. Or possibly more than that after repairs factor in.
Setting Your Expectations and How We Can Help
Realistically, if you have no money in pocket and need to finance a car, you can expect to spend over $5,000 for the best rate, or be prepared to pay more to spend less. When it comes to bad credit, finding a lender who will work with your credit trouble can be difficult, but here at Auto Credit Express we can help. We been helping people overcome their credit challenges for over twenty years. If you need help finding a dealer that will work with you to find the absolute minimum necessary to get a car, even if you have bad credit, let us help. Just fill out our hassle free no obligation auto loan application today!
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