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What is a Down Payment?

A down payment is a sum of money the buyer pays at the time of taking out an auto loan before financing the rest. 


How Does Down Payment Work? 


What a down payment does:  A down payment can lower the principal or amount financed in the loan, this will mean lower payments, and less interest paid.


For example, say you have a 5-year auto loan for $20,000, borrowed at 6.3% interest; a down payment of $5000 would lower your payments from $390 a month to $292 per month.* To see other down payments and terms Check out our Free Auto Loan Calculator.

Why do I need a down payment?


The main reason that dealers ask for down payments is that it reduces the risk to the lender. In other words, if you have non-prime credit, a down payment would lower the amount the lender stands to lose if you default on your loan. A down payment can also help you get approved for the right vehicle. if the amount you are approved to borrow is less than the cost of the desired vehicle, a down payment could make up the difference in order to secure your approval.

Down payments are an excellent way to improve the terms of your loan and lower your monthly payments, especially if you have bad credit. It is recommended to try and put at least 20% of the total price down on a new vehicle or 10% on a used vehicle. Not only will a downpayment lower your monthly payment, but it will also help shield you from depreciation. Financing the entire vehicle can make it more likely that you may become "upside-down". In other words. you owe more on the loan than the value of the vehicle.

How Much Should I Put Down on a Car?

The amount of your down payment should be decided on a case-by-case basis. A number of factors including your credit score, finance goals, and vehicle choice will determine the amount you’ll want to pay upfront. Experian recommends when buying a new vehicle to try to put 20% of the total cost down, this is mostly because of the depreciation in value from the new vehicle becoming a one-owner vehicle. Down payment will help you maintain equity in your vehicle and prevent you from becoming “upside-down”. When purchasing a used vehicle it is recommended to put at least 10% down.

When budgeting for a car loan it is recommended to pay no more than 10% of your income every month for your vehicle loan payment. Beyond just getting you approved the best use for a down payment is adjusting your monthly payment to fit your budget. 

For example, say you have budgeted $200 per month for your auto payment. Your desired vehicle costs $14,000. You are approved to make payments for 60 months at 3.5% interest bringing your total monthly payment to $259.

Lowering the principle around 20% by putting $3000 down brings your payment over 60 months to $202. Allowing you to purchase your desired vehicle within your budget



           Budget: $200/per month

           Terms: 60 months at 3.5% APR


           Vehicle cost: $14,000

           Monthly Pmt: $259
           Down Payment: -$3,000

           New Principle: $11,000

           New Payment: $202

How to Calculate Down Payment?

Down payment can be simply calculated by multiplying the purchase price of the vehicle by the down payment percentage.. Alternatively, you can use our free payment calculator. to estimate down payment and experiment with different amounts 

For example, if you want to put 15% down that would be $150 for every $1000 financed.


 Percentage down X Vehicle Cost = Down Payment Amount

      ..15 x $17,000 = $2,550 Down 

Free Auto Loan Calculator 


How to Get an Auto Loan with No Down Payment

​If you cannot afford a down payment or simply want to finance the whole of your vehicle you may want to learn how to avoid making a down payment on your next vehicle. The terms of your loan, in particular of your approval would mainly depend on your credit score. Boosting your score is the best way to avoid or lower down payment requirements. Another option may be getting a co-signer. This can help you get approved for better terms and may lessen the need for a down payment. Be sure to shop around and check the terms of different lenders, just because a certain lender does not approve you without a down payment does not mean that no one else will. Making no down payment is not usually recommended and making even a small down payment is better than none. -

Best Places to Pre-Qualify Online:

  1. Auto Credit Express

  2. SuperMoney

  3. Buckeye Finance

  4. Carvana

  5. With Your Personal Bank or Credit Union

Can I Use My Car as a Down Payment?

Trade-In & Down Payment 

If you choose to trade in your vehicle the trade value awarded to you from the dealer will act exactly the same as the down payment, coming off the top of the price. Many salespeople will try to mislead you by distinguishing between trade value and downpayment. For example, a $1500 down payment with a $500 trade value would be the exact same terms as a $500 down payment with a $1500 trade value. When making your purchase it is best to consider down payment and trade as the same money.

How to Make a Down Payment?

How to make a down paymet - Bad Credit Auto Loans

The down payment will be made before the close of sale and the terms of the loan begin. Dealerships traditionally accept multiple forms of payment. 

  • Cash.

  • Personal check.

  • Cashier's check.

  • Credit card.

  • Debit card.

  • Pre-approved loan.

  • Personal loan.

Can I Make a Down Payment in Cash?: Cash or a debit card is the most widely used method of making a down payment. Most any dealer will accept all or part of your down payment in cash. 

Can I Make a Down Payment on Credit Card? Using a credit card for another loan is generally not recommended. Having two payments, for one thing, can quickly get out of hand. In addition, credit card interest rates are typically much higher than auto loan interest rates. 

Can I Make a Down Payment on Check?: Most auto dealers will accept a personal check as down payment. However, in some cases the deal will not become legally complete and your term will not begin until your check as cleared or processed. 

Are Down Payments Refundable?

Your down payment is a part of the terms of your loan and your legally agreedupon contract. Unless the vehicle is return and the loan is canceleed a down payment will likely not be refunded. Down payments are money that you owe to the lender and would otherwise be rolled into the loan princople. they are non-refundable.

Pre-Qualify Online
Even with Poor Credit


Bad Credit Financing in Columbus


Have you been turned down in Columbus due to bad credit? Sub-prime financing can be difficult when you are going in blind. To find the best interest rates, many choose to start their shopping online. Avoid the embarrassing denials by shopping Columbus Ohio's best loans online. Pre-qualify from home in minutes, even with poor credit. Some clients can even drive same day with a low payment. If you have bad credit, low credit, or have filed for bankruptcy we can help you find a special finance lender in Columbus Ohio. 

Used Vehicles in Columbus, OH

According to Experian, over 85% of new vehicles purchased are financed. When considering financing a new vehicle in Columbus it is important to consider depreciation. Edmunds reports that a vehicle can lose up to 9% of its true market value the moment you drive it off the lot


Most buyers in Columbus choose to purchase pre-owned vehicles. While you may miss out on some warranty and that new car smell, buying used is often more financially sound. Most of those who avoid used vehicles do so due to the stigma that they will be swindled in some way. In today’s market, buyers in Columbus enjoy many legal protections against misrepresenting goods, and consumers have access to a wealth of resources. The financial aspect, combined with the peace of mind provided by technology explains why used vehicles make up almost 60% of the vehicle financing market

Cost of Financing in Columbus Ohio

The main factors that will determine the cost of your vehicle are: Principle, Down payment, trade, and interest. The principle is the amount owed to the lender after the initial purchase, accounting for down-payment and trade-in credit. The lower your principle the lower your payments. It is recommended to put when 20% when buying a new vehicle and 10% down on pre-owned. Finally, the interest rate, which will be determined by your credit history, will determine the cost of your monthly payment. Most car loans offered in Columbus are “Simple Interest” meaning the faster you pay the loan, the less interest you pay. The max interest rate for used cars in Ohio is 25%. Shop the best interest rates in Columbus.

If you can not get approved through a traditional lender, or the interest rate is too high, a buy-here-pay-here lot may be a good option. Some auto dealers have their own in-house financing and do not require third-party approvals from banks in order to offer you a loan. This can be a great way for someone with less than perfect credit to get a vehicle and get re-established. Some buy-here, pay-here lots report to credit bureaus, however, some will not require a credit check at all and may simply verify your residency and income. BHPH lots may also require a down payment however, they are often more manageable than traditional bank loans. Shop the best loans online 


Columbus Ohio Stats


Population:                      878,553

Average Income:             $69,315


Average Credit Score:     654


Average car payment:     New: $535 per mo.

                                          Used: $335 per mo.