Unless you live in a city where you can rely completely on public transportation, owning a car is a necessity. But buying a reliable vehicle doesn’t come cheap.
As of February 2023, the average price for a new car is over $49,000 and the average price for a used car is over $33,000. That kind of price tag is out of reach for most car buyers unless they can take out an auto loan.
How can I get a car with bad credit and no money down?
Two things prevent most consumers from buying a new car. They either have bad credit, or they can’t afford a down payment. And for some consumers, it’s a combination of the two.
Fortunately, some lenders are willing to give auto loans to less creditworthy consumers. Here are the top five no down payment auto loans for people with bad credit.
Top 5 Bad Credit Auto Loans
Auto Credit Express
How it Works
Auto Credit Express is an online marketplace that connects you with more than 1,200 auto dealerships and lenders.
How it Works
Car.Loan.com is a lending marketplace that will match you with subprime lenders. They have no credit score requirements and are willing to work with subprime borrowers. You can buy, lease, or rent a new or used car through Car.Loan.com.
How it Works
Carvana’s unique value proposition is that you can take out a loan, choose a vehicle, and buy a car all in one place. The company has a large selection of used cars you can choose from, and there is no minimum credit score to apply.
How it Works
When you apply for an auto loan with myAutoloan, you’ll receive quotes from multiple auto lenders who are willing to work with you. If you apply with a creditworthy cosigner, you’ll receive more favorable rates.
How it Works
RoadLoans is an online lending platform that matches borrowers with bad credit scores to lenders who offer new and used car loans. The company works with more than 14,000 car dealerships nationwide.
What is a zero down auto loan?
A zero down auto loan is exactly what it sounds like – a car loan that requires no down payment. This can be an attractive option for those who don’t have a lot of cash on hand or would rather put their money towards other expenses. However, keep in mind that bad credit auto loans may come with higher interest rates and longer loan terms than traditional car loans.
If you have bad credit, a no-money-down auto loan may seem like the perfect solution. But you’ll need to be cautious when considering bad credit auto financing. These types of loans often come with higher interest rates and fees, which can make your car payment much more expensive in the long run.
When shopping for bad credit auto loans, it’s important to compare offers from multiple lenders, including online car dealerships. Online car dealerships may offer more competitive rates and loan terms than traditional lenders, but always do your research and read reviews before making a decision.
Before signing on the dotted line, make sure you understand the loan term of your car loan. Longer loan terms may mean lower monthly payments, but they can also result in paying more interest over the life of the loan. Be sure to calculate the total cost of the loan to determine if it’s the right option for you.
How to Get a Car Loan with Bad Credit
If you have bad credit and need to purchase a car, it can be challenging to find a lender willing to provide you with a car loan. However, there are several steps you can take to increase your chances of obtaining a car loan even with a less-than-perfect credit score.
- Check your credit report: Start by checking your credit report to identify any errors that could be bringing down your score. Disputing and correcting any mistakes could increase your score and improve your chances of getting approved for a car loan.
- Find a cosigner: Having a cosigner with a good credit score can make it easier to obtain a car loan, as lenders may be more willing to offer financing with a lower interest rate. However, keep in mind that a cosigner is equally responsible for the debt and any missed payments can negatively impact both parties’ credit scores.
- Research lenders: Look for lenders that specialize in bad credit car loans, as they may be more willing to work with individuals with poor credit. Some credit unions and online lenders may also offer more flexible options.
- Avoid predatory lenders: Be cautious of lenders who offer car loans with high interest rates or hidden fees. These loans can be difficult to pay off and may ultimately damage your credit history even further.
- Build your credit scores: While it may not be an immediate solution, taking steps to improve your credit scores can help you in the long run. Paying off debts on time, keeping credit card balances low, and maintaining a good credit utilization ratio can all help boost your credit scores.
Thanks to these types of online marketplaces, borrowers with poor credit looking for a zero down auto loan have more lending options than ever. This means you don’t have to be limited by poor financial decisions you made in the past.
However, it’s important to know what you’re getting into before taking out a car loan. Compare offers from multiple lenders and make sure you can afford to make the monthly payments. And most importantly, begin taking steps to improve your credit score.
Frequently Asked Questions
Can I get a car loan with bad credit and no down payment?
Yes, there are car loans available for people with bad credit and no down payment, but the terms and conditions will depend on the lender and your credit score.
What is the average interest rate for bad credit auto loans and no down payment?
The average interest rate for a bad credit car loan with no down payment is generally higher than for those with good credit and a down payment. It can range from 10% to 20%, depending on the lender and your credit score.
What are the requirements for getting a car loan with bad credit and no down payment?
The requirements for getting a car loan with bad credit and no down payment will vary depending on the lender. Typically, you will need to provide proof of income, employment, and residence, as well as a valid driver’s license and insurance.