Affordable Auto Ownership
The used car market is cooling down, which means it’s getting easier to find used cars for less money – including “500 down car dealerships,” where the dealership will let you take out a loan for as little as $500 down.
If you’ve found yourself asking, “Can I get a car for $500 down?” then you’ve come to the right place. We’ll guide you to some resources that could help get you in a car as quickly as possible.
What’s Going on With the Used Car Market?
From February 2019 to March 2021, the average price for a used car according to CarGuru’s Used Car Price Index fluctuated anywhere from $21,000 to $23,000. After the pandemic hit, though, prices skyrocketed.
In one year, from March 2021 to March 2022, the average price of a used car increased by more than 30% to $32,000, a gain of over $10,000 for the average used car. For the first time since they were invented, cars were not a depreciating asset. If you bought a used car in 2021, chances are that its value didn’t go down as you drove it; in fact, chances are that its value increased.
However, as of March 2024, prices are down to ~$27,000, falling about 20% from their previous all-time high.
Right now is the best time in the last several years to buy a car.
Can I Get a Car for $500 Down?
Yes, you can get a car for $500 down, even with bad credit. Things happen, and sometimes you need to buy a car even though you don’t have a lot of money saved up for a down payment. For example:
- Your car broke down and the repairs exceed its value.
- Your current lease is ending.
- You landed a new job that requires a car, and you didn’t have one before.
- Due to a bankruptcy or divorce, you’ve lost your car and need a new one.
- Public transportation in your area is unreliable or dysfunctional.
If you find yourself in any of those situations, it’s possible to buy a car with little or no money down.
Auto Loan Requirements
Typically, most auto lenders will want to see the following documents before they provide you with a loan for as little as $500 down:
- Paystubs from the last 30 days.
- Two years of tax returns.
- Proof of residency.
- Proof of a working phone.
- Proof of auto insurance.
- Valid driver’s license.
How Many Cars Can You Afford with $500 Down?
How much car you can afford will depend on your monthly income. If you have a higher income, you can put less money down – sometimes as little as no money down.
Some lenders require a minimum of 12% down for new cars and 9% down for used cars.
That means, if you put $500 down, the most expensive car that you can afford will be about $5,500. However, there are plenty of auto lenders who will make an exception based on your circumstances. It never hurts to ask.
What Credit Score Do I Need for a Low Down Payment on a Car?
The better your credit score, the better your rates. If you have a low credit score, auto lenders are likely to see you as risky, and they’ll charge a higher rate to compensate for that risk. If you have a better credit score, lenders tend to see you as more reliable and offer you better rates to win your business.
In a report from Experian, a major credit bureau, they found that over 68% of borrowers had a credit score of 661 or higher. Generally, anything below 620 is seen as risky, but there are plenty of auto lenders out there who will work with you.
The minimum credit score that you’ll need to put a low down payment on a car is in the low 600s: anywhere from 600-630.
Conclusion: How to Get a Car with $500 Down
Cars break down. Public transportation stops running near your neighborhood. Your wife moves out and takes the car. Things happen, and sometimes those things can be really hard to prepare for.
To get a car with $500 down, you’ll need a few things:
- At least $500 in savings.
- A 600 minimum credit score.
- Paystubs from the last 30 days.
- Two years of tax returns.
- Proof of residency.
- Proof of a working phone.
- Proof of auto insurance.
- Valid driver’s license.
Once you have all of those requirements met, you can start shopping around for auto lenders.
Are you buying a car for the first time? Here are things you should know.