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
· $5,000
percentage: 10%
· $10,000
percentage: 10%
· $15,000
percentage: 10%
· $20,000
percentage: 10%
· $25,000
Read more about down payments from https://www.investopedia.com/terms/d/down_payment.asp.