Down payments are especially important when you need to finance with poor credit car loansWhat we can tell you

Applicants with bad credit often don’t understand the importance of a down payment when it comes to terrible credit auto loans.

We come across this every day here at Auto Credit Express where we’ve been working in bad credit auto sales since 1992.  We even developed a web site so applicants can look up topics like credit repair and FICO scores as well as today’s topic, the typical down payment requirements for bad credit auto loans.

Down payments

Nearly all subprime lenders require that applicants have a down payment in the form of cash or real trade equity. for the most part, they do this because they see it as a way to increase the probability that the borrower will make regular, timely loan payments.

Think of it this way: with little or no money invested in a car, especially during the early stages when a vehicle is worth less than the loan balance, it’s much easier for a borrower to just walk away from that loan. But with 10% or more of their own money invested in it, it’s more likely that borrower will continue making those loan payments.

Down payments also help in two ways:

•    A down payment lowers the monthly payment by reducing the loan amount. the larger the down payment, the lower the monthly payment.•    A down payment can be used to shorten the loan term. for example, instead of lowering the monthly payment, you can use the down payment to reduce the time the vehicle is worth less than the payoff – known as “negative equity” by financing it for 48 months instead of 60 months.

In both cases the down payment reduces the total amount of interest that you’ll pay. this is especially important with the higher interest rates that come with poor credit car loans.

The bottom Line

With any loan, but especially a bad credit car loan, down payments reduce your interest costs. down the road it may also enable you to trade out of your car and into a loan with a lower interest rate that much sooner.

At Auto Credit Express we specialize in assisting people with bad car credit find a dealer for their best chance at getting approved auto loans.

So if you really want to get your auto credit back on track, you can begin now by filling out our online auto loans credit application.

Tags: approved auto loans, Bad Credit, down payments

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The Down Payment Requirements of Approved Auto Loans