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When you have bad credit, you typically need to have a down payment in order to get approved for an auto loan, but how much money you need to put down often depends on the type of dealership you go to in Los Angeles. While subprime lenders generally have a minimum down payment requirement, we recommend you put more down if you can.

Down Payment Requirement for Bad Credit Car Loans

What do bad credit lenders in Los Angeles look for when it comes to a down payment? Although the amount usually varies, many ask for a minimum of $1,000 or 10 percent of the vehicle’s selling price, whichever is less. You can either pay with cash, trade-in equity, or a combination of both.

This means that if you choose to finance a car selling for $5,000, it’s very possible you could put $500 down and meet the requirement. Again, keep in mind that the down payment required varies, so you should ask your dealer about this to find out how much you really need.

How a Larger Down Payment Can Help

Did you know that a larger down payment actually helps you in the long run? It’s true, and we even recommend that bad credit car buyers in Los Angeles put more money down than required if they can.

There are many benefits to making a larger down payment, but the biggest one is that you save money. Not only does it lower your monthly payment, but it decreases the amount of interest charges you pay overall.

Let’s take a look at an example. Mike is buying a used vehicle that sells for $13,700, plans on financing it for 60 months (five years), was approved for an interest rate of 18 percent, and has a trade-in that’s worth $2,300. Here’s what his car loan would look like with different down payment amounts (note: calculations don’t include tax, title, and license fees):

  Down Payment 

  Monthly Payment 

  Total Interest Paid 

$0

$348

$7,173

$1,000 (typical minimum)

$322

$6,650

$2,300 (trade-in amount)

$289

$5,969

$3,300 (trade-in plus $1,000)

$264

$5,446

If Mike wants the most bang for his buck, he should consider applying his trade-in plus some additional cash. Interest charges are costly with bad credit because it’s tough to qualify for a lower rate, but putting more money down helps offset these costs.

The Bottom Line

The larger the down payment, the cheaper your auto loan is going to be, and we all know how expensive Los Angeles can get. We also know how hard it can be to find financing when you had bad credit.

Luckily, Auto Credit Express can help you find a local dealership that knows how to work with bad credit. We’ve been helping Angelenos get connected to dealers in their area for over 20 years. Fill out our free car loan request form right now, and we’ll get to work matching you with a local dealership.