Bad Credit Car Loans With No Money Down
Providing a down payment on a new or used car reduces the amount you need to finance and can keep you from owing more money than your vehicle is worth. However, if you don’t have the cash to make a down payment upfront, some auto lenders may still finance your car even if you have bad credit. While low-interest auto loans with no down payment are primarily offered to borrowers with high credit scores, there are ways to secure no-money-down car loans.
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What is a bad credit car loan with no down payment?
A bad credit score typically falls between 300 and 579. While some lenders may be willing to offer you a bad credit auto loan, it can be difficult to finance a vehicle if your credit needs work. Bad credit loans come with higher annual percentage rates (APRs), increasing your total cost of borrowing.
A down payment is a lump sum of money you provide your lender when financing a car. If you follow the 20/4/10 rule, it’s smart to offer a down payment of at least 20% to ensure the loan is affordable. Down payments also help you avoid an upside-down car loan — meaning you owe more on your car than it’s worth.
When shopping around for car loans with bad credit and no money down, it’s important to compare auto loan quotes. By filling out a single form with LendingTree, you may receive up to five auto loan offers from lenders.
Where can I get a car loan with no down payment?
While you can finance 100% or more of a car with no down payment even if you have bad credit, you’re likely to receive a very high interest rate. The following lenders offer car loans with bad credit and no money down, but keep in mind that the starting APRs below are typically reserved for borrowers with excellent credit.
| Lenders | Starting APRs | Loan terms | Loan amounts |
|---|---|---|---|
 | 7.90% | 36-84 months | $10,000-$100,000 |
 | 6.49% | 36-72 months | From $4,000 |
 | 7.90% | 36-78 months | Starting at $1,000 |
- Starting APR: 7.90%
- Loan terms: 36–84 months
- Loan amounts: $10,000–$100,000
OpenRoad Lending currently only offers the option to refinance your car loan. Not only does this lender accept consumers with bad credit, it also allows co-borrowers so you can qualify for better rates. Unfortunately, this lender does not offer car loans to self-employed applicants.
The vehicle you’re refinancing must be eight years old or newer and have fewer than 140,000 miles. OpenRoad may refinance up to 120% of your car’s wholesale value, though borrowers with good credit may be able to refinance up to 175%.
- Starting APR: 6.49%
- Loan terms: 36–72 months
- Loan amounts: From $4,000
Capital One, one of the largest banks in the U.S., offers rates that are competitive with other large banks. This lender considers all types of credit and offers auto loan prequalification and auto loan preapproval with Auto Navigator, its auto loan marketplace.
To qualify, all vehicles must be purchased at one of Capital One’s partner dealers. Car models must be no older than 10 years and have fewer than 120,000 miles. In some instances, an older car may be allowed but it must have less than 150,000 miles.
- Starting APR: 7.90%
- Loan terms: 36–78 months
- Loan amounts: Starting at $1,000
Carvana is an online car dealer that also offers car loans. It offers the same convenience of traditional dealerships — get your car and your loan in one place — and it does it all online.
Carvana has no minimum credit score threshold, but it does require that customers have no active bankruptcies and make at least $4,000 a year. Carvana financing can only be used for Carvana vehicles, but once you apply, you have 45 days to decide whether to accept the loan. Borrowers also have the option to add a cosigner to their Carvana loan.
How to get a car with no down payment
It’s important to lenders that a car is worth more than what you borrow for it. Here are ways to borrow less without making a down payment.
1. Determine the car’s value
To determine a car’s value, use free tools such as Kelley Blue Book (KBB) or Edmunds. The goal is to pay less than the car’s estimated value.
Dealerships like to price cars as high as possible, though the list price of a car isn’t necessarily representative of how much it’s worth. If a car is worth $10,000 but you only pay $8,000 for it, that’s a good deal on the car — and you could probably get a good deal on the loan, too.
2. Don’t get unnecessary add-ons
From fancy appearance packages to extended car warranties, add-ons can increase the amount you’re borrowing and make the loan more expensive. Car dealerships may push you to buy these add-ons, which are usually overpriced.
The one exception is auto GAP insurance, which could be useful to you with a no-money-down car loan, especially if you get a good price on it. If your car is stolen or totaled, this type of coverage pays the difference between the car’s estimated value and what you owe on it. Lenders and auto insurance companies offer this protection, so be sure to shop around for the best deal.
3. Ask for the “out-the-door price”
With a no-down-payment car loan, you aren’t just borrowing money for the car — you’re also borrowing money to pay for the taxes, dealer fees and other charges on the car.
Tax, title and license (TT&L) fees will vary by state. For instance, sales tax in Oregon is 0%, while it can be as high as 11.45% in Louisiana. Before purchasing a vehicle and selecting a lender, be sure to calculate how much you can expect to pay in taxes and fees so you understand your total cost.
4. Trade in your current car
Trading in your car can also make buying a new vehicle with bad credit and no down payment more affordable. If your trade-in is worth more than what you owe on it, that difference can act as a down payment. Say your trade-in is worth $4,000 and you only owe $1,000 on it. The $3,000 difference goes toward reducing what you would borrow for your new auto loan.
5. Consider a small down payment
Yes, this goes against getting a no-money-down car loan. But you don’t have to put down thousands of dollars to make a difference. Even a few hundred dollars could be enough to show a lender that you’re serious about getting a car.
A small down payment could improve the loan-to-value (LTV) ratio and help you get a loan or a lower APR. Importantly, it could also prevent you from becoming upside down on the car loan.
How to negotiate a no-money-down car loan
If a lender requires money down or the APR is too high, the following factors may demonstrate that you’re creditworthy enough for a zero-down auto loan.
Steady income: If you’ve worked for the same employer for at least a year, that job stability could help negotiations. Also, the higher your income, the more likely it is the lender will see you as capable of making your auto loan payments.
Consistent residence: If you’ve lived at the same residence for a year or more, lenders may see that as another sign of stability.
Good credit history: Even if your credit isn’t perfect, paying down on debt and avoiding missed payments could be a major point in your favor.
Low amount of debt: If you don’t have many outstanding loans and your other expenses are low compared to your income, lenders may believe that you’re more easily able to repay a car loan.
Autopay discounts: When you compare lenders, look for autopay rate discounts. Some lenders offer a small percentage off the APR for borrowers who sign up for automatic payments.
Get a cosigner: If you have poor credit, consider applying for a car loan with a cosigner. This can be a family member, domestic partner or friend. Keep in mind that your cosigner will also be held responsible if you’re unable to repay the loan.
Frequently asked questions
You may be able to buy a car with no down payment if you have good credit, a trade-in with positive equity or get a good deal on the car you’re buying.
The credit score needed to buy a car depends on the lender. If you want a car loan with an APR under 10%, you need at least a 601 credit score for a new car and 661 for a used car. Typically, the higher your credit score, the better.
You may be able to get a car loan with a 500 credit score, though it may be smarter to improve your credit score first. If your credit score is low, using a cosigner and offering a large down payment can boost your odds of approval.
It is recommended that you make a down payment when buying a car, especially a new one, because cars depreciate quickly. Being upside down on a car loan happens when you owe more money on the car loan than the car is worth.