A Down Payment Can Increase Your Chances of Car Loan Approval with Bad Credit!
Most people usually give up on getting a car loan due to poor credit but it is actually possible. It might seem challenging though but with a few right steps, you can get that car you need. An important factor in getting a car would be dependent on your poor credit loans. FICO uses the credit range of 300-850 and being that they are a common model for credit scoring, they could stand as the average lenders' qualification.
This is because a score of this amount would be sure to get you a lot of loan options.
So if you have bad credit and you're still looking forward to getting a car loan, you might want to consider alternatives - like going for a down payment.
What exactly is a down payment?
A down payment is when buyers of a car payment at least 10% of the value of their car. For example, if you want to buy a car of $15,000, you would be required to make a down payment of $1,500. This could vary as it depends on if the car is brand new or used an old car. Opting for a 10% down should be only considered when necessary as most lenders use the average rate of 20%.
What is considered a Good Down Payment on a Car?
A good down payment depends on both the price of your car as well as your credit scores. So if you're opting for having a larger down payment on a car loan, it would help you in your bad credit situation. It is advisable to place a 20% minimum down payment when purchasing a car. It is also advisable never to go lower than at least 10% and should only be resulted in when you have absolutely no other option.
Getting a new car, the payment and cash due are usually determined beforehand. So instead of having a lot of down payment, customers are advised to continue with just the cash required during this signing. While in cases of an used cars, you would want to consider paying a 10% down at the very least.
What is considered a Bad Credit Car Loan Down Payments
Having bad credit or no credit at all, you would have a down payment of at least $1,000 for a car. While a high-Risk auto loan come with as much down payment of about 20% of the car sale price.
Below is a list that can help you determine your credit stance. These are very common car sale prices and how they help you with your bad credit.
Sale Price and Percentages
Read more about down payments from https://www.investopedia.com/terms/d/down_payment.asp.