Democratic Dad Blog

Understanding Bad Credit Car Loans – Used Car Financing

When you have bad credit the last thing you want to have to hear when you are looking for financing to purchase a car is that they need to have a cash down payment.  The “How to” of buying a car with bad credit can be hard to get down pat. It will oftentimes mean that you do not have that much, if any, extra cash laying around to put down as a down payment on a car.  However, a down payment is used to reduce the amount that is being financed.

There are several ways in which down payments work for a car dealership, but are made to look much more favorable for the individual.  The way that the dealership does this is my moving numbers around on the loan application. 

The dealership will often inflate the retail price of the car to the max, but the down payment will reduce that amount to the actual price needed for the loan.  All of this work is dependent on numbers. 

However, if the individual has a trade-in to be considered, then the same thing can be done.  The trade-in can be considered as a down payment, but there are times when a cash down payment is still needed.  The dealership will raise the original cost of the car so that the down payment and the trade-in will be reflected in the price. 

The individual is still getting ripped off. If there loan is for $10,600, then be sure that the dealership will sell that car to them for exactly that.  Dealerships are use to doing this type of of creativity in their paper work every single day and they are still able to keep it quite ethical.

They are even able to show an individual’s trade-in as a dealer cash rebate to cover their behinds.  In the long run, individuals might be better off dealing with an on-line lending source as an alternative.