Auto Loans with Bad Credit… No Money Down means BIG money later!

How much are you willing to pay for a car? If you have bad credit, what you’re willing to pay and what it really costs are two very different things. You may have your heart set on a car that runs about $20,000 – not a terribly high price to pay on a car. But, have you considered the total cost of the car loan to pay for it? Buying a car means paying taxes, license and registration, insurance, finance charges, and interest payments. This will add several hundred dollars to what you actually want to pay for a car and can be a bit of a shock if you’re not ready for them. But, the dealership may have an answer for your budget woes. Almost every dealership offers savings and discounts on various car models, and you may manage to find one who will give the no-money-down option, even on auto loans with bad credit.

Financing with no money down is a favored marketing strategy among car dealerships and, even among some car loan companies. It is aimed at getting customers in the door who might be strapped for cash, but who have the income that can manage the monthly payments on a car loan. Car loans for bad credit can come with these sorts of financing terms. In fact, they are popular among people who are having money troubles and think they can get a discount through this kind of financing. But, no one gives anything away for free – how would anyone make money doing that?

The no money down financing scheme is not a giveaway. Instead, the money you would’ve paid down is rolled back into the balance of the loan. This means you’ll be paying interest on the full price of the car, plus the other costs that come with the purchase. If you don’t think that this will significantly increase the cost of your car, think again. Take, for example, the loan for a $20,000 car. If you were to pay $4000 down (the usual 20%), you’d be paying interest on the remaining $16,000. This doesn’t mention taxes and other costs, but the math is simple, paying interest on $16,000 costs less than paying interest on $20,000.

As stated before, no money down financing can help you buy a car when you’re short on money for a down payment. But, even a small down payment would decrease the burden that the loan would bring over time by reducing the principal amount. Offsetting the costs with a 10%, or 5%, down payment can save hundreds of dollars on the loan. It may even help reduce your interest rates by showing your lender that you’re sincere about the investment. Since you’re aiming for car loans for bad credit, anything you can do to reduce your interest is worth the effort.

The simple fact is, you don’t need gimmicks in order to buy a car. Though many dealerships will throw a wide array of financing deals at you, going for the simplest plan is the best way to keep more money in your wallet. If you can’t afford a down payment on a $20,000, look for a $15,000 car. If a new car is beyond your means to muster the down payment, buy a used car. Living within your means is the way to improve your credit, not plunging further into debt. Car loans for bad credit are expensive, and you’re better off putting your finances in order before you start shopping for cars.

If you can’t put off buying a car because you need reliable transportation to get to work each day, then make a wise decision on who your going to get your financing from. The choices are varied, from car dealerships to car loan companies, and the number of lenders can be intimidating forcing you into making a quick decision for something that, really, should be done with careful thought. Though there are many ways to search, going to Federal Auto Loan can help demystify the process by connecting you with a nationwide network of affiliated lenders and car dealerships. Our goal at Federal Auto Loan is to make your shopping experience for auto loans with bad credit a simple one.

Get on the road today.


Our simple online car loan request form is quick, easy, and free.