Securing Car Loans with Bad Credit Does Not Depend on Down Payments

The challenge when buying a new car with low credit scores is made a little easier when a down payment is provided as part of the purchase deal - or at least that is what is often claimed. A down payment when seeking car loans with bad credit would reduce the loan size. But it is not true.The truth is there is no problem with securing loan approval with no down payment. In fact, there is no situation where a lump sum payment is required, and most dealers have ulterior motives when telling customers that a down payment is needed. This is the trick that so many people are taken in by, and one that can see them hundreds of dollars more than they have to.There are some simple points that should be known before agreeing a car loan. This way, the purchaser is in a stronger position to negotiate the best possible terms. Here are just 3 pointers.Car Financing Is For Mark-UpCar dealers are synonymous with double dealing, and cheap shots, and their reputation is well deserved. When customers are seeking car loans with bad credit, the dealer will contact the finance company on their behalf and apply for the finance deal. And, they will secure the lowest possible interest rate.That seems fine but if the finance company offers finance at a rate of 9.5%, then the dealers will increase that to 11.5%, pocketing the difference with each payment. This is common practice in the motor trade, but is not particularly well-known amongst consumers.What is more, dealers tell their customers that approval with no down payment is practically impossible because of their bad credit status. Usually, they explain that the down payment reduces the car loan sum and, therefore, the repayments. This is not true at all, with down payments usually placed in the bank account of the dealer, and the financing deal set at 9.5% to make it seem as though a discount is secured.Down Payment is Not ObligatoryA common claim is that down payments are obligatory, in the same way that mortgage provider usually only allow a maximum 90% financing deal. This is simply not true for car financing, and a 100% car loan with bad credit is perfectly acceptable.In fact, it is not even necessary to get financing through the car dealers, and instead a loan can be secured from a bank or other lending institution. When turning to this financing option, approval with no down payments is the norm and the loan deal can be trusted as being straightforward and honest.So, instead of the 11.5% the dealers claim must be paid, a more competitive 10% might be charged, even with bad credit. Getting the car loan is essential for many of us seeking a new car, but the right terms are important too.Pre-Approved LoansThe best strategy to securing a car loan with bad credit is to be pre-approved by a bank or online lender before going to the car dealer. This then gives the customer the power in negotiations. They do not need to work out financing terms with the dealers but can simply tell the dealer what car they want and at what price.This means that the dealers have no room to insist approval with no down payment is impossible, and are not given the chance to pocket extra profits on the car loan - and at your expense.