You don’t have a boatload of cash for a down payment on a vehicle and that is OK. This is why you need to be test driving a brand new car right now. All of the loans approved in this day and age are doing by a computer system- an algorithm. Not having the best credit and not having a high down payment will not stop you from getting approved. The lower the LTV, the better shot at your loan approval. Here is how it’s done- BEAT THE SYSTEM.
All of the auto manufacturers have one goal- move more metal. In order to do this they incentivize the dealer to sell the vehicle or the consumer to buy the vehicle. This incentive comes in the form of dealer cash or rebates… sometimes both. Dealers are already discounting the selling price of new vehicles to stay competitive, so you don’t have to have a huge down payment to get a great approval.
Here is some simple math for you.
- A 2019 Toyota Camry MSRP $26777
- Dealer discounts the vehicle to $22873
- You put $500-1000 down
- Your amount financed before Tax, tag, fees is approx $21873
- Bank values that vehicle at $24873
- $21873 ÷ $24873 =’s 87 % LTV
You are financing well below what the vehicle is worth and this is going to make your loan score well. If you have challenged credit and do not have a large down payment, a new car is the way to go. New cars present a lower risk to the lender, so yes you will get a lower rate. The new car will also have a full warranty from the manufacturer so NO REPAIRS. Most new cars also come with a few years of maintenance. It’s a win- win for everyone.