Auto Loans: With or Without Down Payment

Many would wonder what is the use of collecting down payments for auto loans. Could it be to lower the risk of bad credit or just to make more money at the start of the transaction? Actually, both of these would apply.

Most car buyers who are trying to get bad credit auto loans feel that they need to get the funds from automobile dealership for their auto loans because of their credit issues in the past or their credit scores. Yet, most people who have bad credit do not even check with their banks before they decide to obtain funding from automobile dealerships. Because of this, the loan principal may increase because of finance charges which are inflated as well as transaction fees added by the lender.

It is normal for car dealers to raise the price of a car above the price when the car was bought from the company or a previous owner. And if you would apply for bad credit auto loans without down payment, interests will raise even more. Of course, your monthly payment will also go up, which may amount equal to the monthly gas expenses.

But if you get auto loans outside the dealership, you will have a better chance of approval without any down payment. Be sure you try this one before you shop for a new car. You have to know first the amount of money you will be approved with, for the auto loans with no down payment. This way, both you and the dealer will know that you will have a loan which is secured and you have to pay an amount which is fixed.

But if you are able to present even a small down payment, you will be able to save lots of money. Most dealerships would accept down payments that may amount as low as $199 and maybe even less. There are times that they will also have special offers, where they accept even lower amounts for your down payment. You will then negotiate with the monthly payment when you are in the stage of negotiating the terms. Hence, it is important that you would not just jump into auto loans that you will not be able to afford. You will risk of repossessing your car. You will be able to get lower monthly payments if you would make down payments.

Remember that it is still possible to get a car even if you do not have money for down payment or if you have a bad credit in this time of recession. This is better off than the past situations where large down payments were needed for you to qualify for auto loans.

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