If you have bad credit and are looking for an auto loan, the banks are usually going to look for a good equity position. The easiest way to achieve a strong equity position is with money down. If a car is worth $15,000 and you are financing $15,000 you have neither positive nor negative equity. To create a good equity position you must finance less than what the car is worth. If you have very little or no money down, you may be able to reach the desired equity position by purchasing a car from a dealer that was able to get the car for less than its actual value. This is not as common since usually cars cost approximately the same for all dealers; however it does happen. If you have flexibility with your car choices it will be easier for the dealer to match you with an auto loan that you can achieve the banks desired equity position with little or no down payment.
