Bad Credit Car Loans, No Down Payment?

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A down payment can be one of the biggest hurdles to overcome when you're shopping around for a used car with bad credit. There are lenders and dealers out there that offer "no money down car loans". It would be nice to think that "no money down" or "zero down" advertisements apply to everyone. Though, they have a nice ring to it and are not impossible to get - the benefits you gain from having a down payment usually outweigh anything you would gain by not having one. In fact, you probably won't qualify for a no money down auto loan if you have bad credit as most subprime lenders require a down payment. Don't let that keep you down, there are still options out there for you. You can still get approved for a car loan even with less than perfect credit. That's where we come in, Auto Credit Express. We have a network of dealers that are specialized to handle special finance situations just like yours, request auto financing today.

What is a No Money Down Car Loan?

A no money down, also known as a zero down auto loans or no cash down auto financing, car loan is when a car buying customer secures a car loan without having an initial down payment. These are typically offered to car buyers with a higher credit score, above 700.

A down payment is your initial payment on a car loan that's made in cash, trade-in, or a combination of both. It's usually in the car buyer's best interest to place a down payment for many reasons. The biggest reason for having a down payment is to lower your monthly payments by using it to reduce the total amount financed which in turn will reduce your overall interest paid as well. By placing a down payment on your new car loan you are telling lenders that you're serious about owning, and paying for, this car. But what if you don't have the cash on hand or the equity in your vehicle to use as a down payment? That's where a no money down car loan comes in. These types of loans can be very helpful for car buyers in this situation.

In order to qualify for a no money down car loan you typically have to have a higher credit score, they like above a 700, and a good credit history with no bad marks when it comes to auto financing. Keep in mind when you get a zero down car loan you are financing the entire purchase price of the car including anything extra like: tax, title, and license fees. This will cause you to end up having a higher payment and paying more in interest over time. If you have bad credit and are struggling to find a dealer that will work with you - talk to us, Auto Credit Express.

No Money Down Car Loans with Bad Credit

When you have bad credit, phrases like “no money down” can be enticing, perhaps making you think it's a way to save. The truth, however, is that not putting down money can end up costing you more in the long run. In fact, subprime lenders, which you have to get financed through if you're struggling with credit issues, almost always require a down payment. Research shows that buyers who make a down payment are more likely to make regular, on-time payments and are less likely to default on their loans, so it's obvious why lenders ask for one – especially with bad credit in the picture.

Subprime lenders typically ask for at least $1,000 down or 10 percent of the vehicle's selling price, whichever is less. You can also trade in your old car and use the equity as a down payment on your new car.

Even so, a down payment is something that works to your advantage if you have bad credit. By having a down payment, you can shorten or eliminate the time your car has negative equity, borrow a smaller amount, and save money in interest charges over you loan term. Though your lender may only require a small amount, it's often recommended that you put down as much money as you can. Doing this shows your lender you're serious about paying back your auto loan.

At Auto Credit Express, we're also serious about loans and helping people achieve a better quality of life through auto financing. This is why we work with an extensive network of special finance dealers that can help people struggling through bad credit issues. We can't guarantee a no money down auto loan if you have bad credit, but we can work hard to take the stress out of your search for the right dealership.

Bad Credit No Money Down Car Dealerships Near You

Car dealerships frequently run special deals and promotions such as zero down car loans. You can keep an eye or ear out for advertisements of no money down offers, as well as research car dealerships near you for their current deals. However, you should be aware that no money down car loans are typically unavailable to you if you have bad credit.

Having a less than perfect credit score changes the process of financing a car, including your down payment options in many cases. Having bad credit reduces the number of lenders that are willing to finance you because of the additional risk. At the same time, lenders see a down payment as something that reduces risk. So, finding a subprime lender that's willing to give borrowers with poor credit a zero down auto loan becomes very difficult for these reasons. This means you'll probably spend a lot of time going from dealer to dealer looking for such an offer without much success.

Another obstacle bad credit presents is that not all dealerships are signed up with subprime lenders. Even if you went to a local bad credit no money down car dealership, there's no guarantee that they work with lenders that offer bad credit loans, as it may be a dealer that only offers in-house financing.

Once you find the right kind of dealer, the first thing the finance manager is going to do is look at your credit score and pull your credit report. The second thing they're likely to do is look at your income level and monthly bills on your auto loan application. These factors determine the type of car loan you qualify for and help the finance manager decide which of their lenders may be able to approve you. Do this enough times, and you'll typically find out that very few – if any – lenders are willing to offer a zero down auto loan to somebody with poor credit.

While you may need a down payment with bad credit, it's also in your best interest to have one in the first place. A down payment comes with many long-term benefits, like helping you save money by reducing the amount of interest charges you pay over the loan term. This can make a big difference considering the higher interest rates that bad credit loans typically carry. Even if you were to find a no money down car loan with bad credit, it's likely still in your best interest to provide one if you were to crunch the numbers.

If you're dealing with credit trouble and need a car loan, we want to help you find financing. Auto Credit Express works with dealerships all across the country that specialize in handling unique financing situations, such as having zero money down. We can help you get connected with a dealership near you that wants to get you behind the wheel and back on the road.

No Money Down Car Loan Tips

If you're confident that you want a zero down car loan, you should do some prep work before heading to a dealership. Not being prepared can set you back in the car buying process, and it's best to know where you stand and what your car loan might look like beforehand. To make your car buying experience as easy as possible, follow these four tips:

  1. Check your credit score and reports – Most lenders look at your FICO credit score to determine eligibility, and view your credit reports to see how you've paid your bills in the past. You're entitled to a free copy of your credit report every 12 months from each of the three credit bureaus: Experian, Equifax, and TransUnion. Make sure everything is correct, and dispute any negative inaccurate information to the reporting credit bureau.
  2. Consider trading in your car – If you have equity in your car or it's paid off, you can trade it in and apply all or part of its value toward your next loan. This turns your trade-in into your down payment. Because many lenders require you to put money down, you can use your trade-in to lower the cost of your loan and possibly avoid having to pay anything out of pocket.
  3. Prepare to pay more – If you decide not to put any money down, you can expect to pay more for a car loan in the long run. You can see the difference yourself by putting the numbers into an auto loan calculator online. Compare how much you end up paying overall with and without a down payment, and you'll see how not having one raises the total cost. Additionally, lenders may make up for the lack of a down payment by raising your interest rate, which means you end up paying even more.
  4. Read the paperwork carefully – Regardless of whether you put money down or not, make sure you read the fine print and ask questions about all documents related to the car loan. Look over everything and make sure the final contract is correct and includes everything you discussed with the dealer and/or lender.

These tips can help you start your no money down car loan off on the right foot. With a purchase as big as a vehicle, you'll want to know exactly what you're getting into before signing for a loan.

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