Having a down payment is one of the most effective ways to save big on an auto loan. After all, a larger down payment can mean smaller payments with less interest paid over the life of the loan. Many consumers understand this and will try to find creative ways to secure the funds needed for a down payment.
Sadly, a personal loan cannot be used as a down payment.
What Is a Personal Loan?
A personal loan is an unsecured loan, A personal loan is an installment loan, meaning that the payments on the loan are always the same and due at the same time each month.
Most personal loans range from 6 months to 5 years. You simply receive the funds in your bank account and repay the loan with interest over a set period of time.
What to Use as a Down Payment
Auto lenders ensure that consumers place their own money as a down payment on an auto loan. This is because the lenders want to ensure that the cars buyers have a vested interest in their vehicle.
When it comes to a down payment on an auto loan, you will usually have 2 options:
- Cash- Most lenders will ask for at least a 10% down payment or $1000, whichever is less.
- Trade-In – Dealers love a trade in because they sell a car all while getting another car for sale on the lot with minimal effort. Be sure to know the complete value of your car by using tools such as Kelly Blue Book to find your car’s value.
If you are unable to come up with a down payment, your best bet may be to find a buy here pay here dealership that works with bad credit car buyers.
Finding financing for a car is already hard, but finding financing with a less than perfect credit score can be much harder. If you are looking to buy a new car but are in need of financing, CrediReady can help. Our nationwide network of trusted dealers and verified lenders work with buyers in all credit situations. Take a moment to fill out our free no-obligation loan inquiry form and start shopping for your dream car today!