An approval stamp in green stands in front of a dealership lot indoors

Does a Large Down Payment Increase Your Chances of Approval?

Milad Hassibi November 30, 2018


Down payments are essential for almost every kind of loan. While a large down payment can help you save on interest expense on a car, it does not directly reduce the effects of bad credit.

Any lender will still need to examine your credit score and report, regardless of the down payment amount you provide.

What is the down payment for a car with bad credit?

If you have bad credit, most lenders ask for a down payment of $1,000 or 10% of the vehicles final A woman was approved for an auto loan with a large down payment selling price, usually whichever amount is less.

Without a down payment, qualifying for an auto loan with bad credit will be extremely difficult. A down payment is almost guaranteed if you are a consumer with bad credit searching for a car.

Although most lenders just ask for $1,000 or 10 percent, it is highly encouraged that you attempt to put down more than the minimum being asked. A large down payment is great because you will end up borrowing less money from your creditor, which leads to less money being spent on interest.

Interest can be a large burden on consumers with bad credit since their rates will be significantly higher than consumers with a healthy credit score.

Putting Down 50 Percent or More

If you end up providing 50 percent or more down on an auto loan, the loan to value ratio (LTV) will be very low.

Most lenders will be happy to accept a 50 percent down payment. However, most lenders also have a minimum amount you must request in order to obtain financing.

Get a Car Loan with Any Credit Along with a Happy Couple and a New Black SUV next to them

A large down payment may not be enough for consumers with less-than-perfect credit. A lender will want to ensure that you can repay your auto loan by verifying your income is over $1,500 per month pre-tax.

So in the end, even if you provide a large down payment, there will still be additional requirements you will need to fulfill.

Final Note

Having bad credit can make everything more expensive, including purchasing a car. If you are looking to buy a new car but have less than perfect credit, 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!



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