No Money Down Car Loan Auto Financing for Bad Credit

Put Down No Money to Buy Your Next Car

Amanda Hart

Times are tougher

It's not like people never tried to save money before 2008, but there's no denying things are different now. As the economy stumbled, people found out very quickly just how vulnerable their finances could really be.

With this change in the economy came a change in how people think. Now we have more coupon champions and bargain hunters than ever before. There are also more people with damaged credit than ever before, and many will have no choice but to get a car with no money down and bad credit.

Having a vehicle is not even an option for many people and families across the nation. Unless they live on a farm with horses or in a city with buses, cars are an absolute necessity. Many of these people also don't have a lot of money to spare, and have even less credit to their name.

So when these people have to get their next car deal and the lender requires a down payment because of their credit scores, what options do they really have open to them?

Fuzzy math

There are many dealers and lenders these days that cater to people with bad credit, and there are also dealers who can work around down payments as well. There are more people in this situation than ever before, why wouldn't they offer some kind of service?

One way they do this is by manipulating the sales price of the new car and the trade in value of your old car. Say you want a car that costs $10000 even. The lender says they will approve your bad credit car loan, but they require a 10% down payment, which in this case would be $1000.

The car you're trading in is only worth $500, so where will the other $500 come from? As it stands right now, you will owe $9500 on this car. So to get you a $1000 down payment, the dealer ups the price of the vehicle to $10,555 and gives you a trade in of $1055 for your old car.

This way, you still owe the same $9500 for the car, but by raising the price and the trade in value, you got a 10% down payment without really having it.

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