A number of people who qualify for reasonable car loan options, even those with credit issues, can’t afford the large down payments often recommended when purchasing a financed new or late model used car from a dealership. While it may seem hard to believe, there are actually a number of situations in which you can purchase the car you need from a dealership for only $500 down.
Know Your Finances
When buying a car with a combination of financing and a low $500 auto down payment you need to go into the dealership negotiation with a strong handle on your current financial negotiation. Your credit score and income will play a large part in the car loan approval, so you should know which terms you are likely to qualify for before you set foot on the car lot. Check your credit and use the scores you find to inform which kinds of loan terms a dealership would approve for you. If you do not want to have your credit checked, or already know your credit is going to be a problem, look at your monthly budget for car payments after putting down the $500 and be sure to shop for cars within your practical means.
Higher Loan Payments or Longer Loan Terms
The down payment of a vehicle, especially when it is coming from someone with credit issues, is of little security for the dealership in case you become unable to keep up with the monthly loan payments. A car you only put $500 down on will, in all likelihood, come with either higher monthly loan payments or a longer loan term. A low down payment will mean there is more of the car’s principal cost left over that the dealership needs to recoup through the monthly loan payments. You can choose to spread that principal repayment over a much longer loan term, or pay more monthly, until it is repaid.
Again, a clear and realistic understanding of your current finances will make this easier to decide. Look at your income and decide if you can accommodate the higher monthly cost of the shorter term, or if it makes more sense to spend less and take longer paying off your car. Keep in mind, you can always refinance the loan down the road if your situation changes and you want to adjust the terms of your car’s financing.
Can I Really Buy a Car with $500 Down?
It is possible to only spend $500 on the down payment for a car, if you are prepared to make the important financing decisions that come with that level of upfront payment. Arm yourself with information regarding the cars available for that down payment, as well as your own realistic financial situation, before you put your money on the table.
