Down payments can be key to car loan approval

Down payments can be key to car loan approvalThere are many factors that go into car financing, but one of the key components that buyers should be aware of is the all-important down payment. Many lenders advertise "no money down," but down payments are there for a reason. Paying a chunk of the loan up-front means lower monthly payments and a shorter loan.

In addition, a big down payment is looked on favorably by creditors and could end up saving you money over time.

Steve Bowman, chief credit and risk officer for GM Financial, recently spoke to Fox Business about the many factors that influence auto loan approval. Among the variables he stressed was the importance of putting a lot of money down. Even if your credit score is bad, putting down lots of money up-front can get you approved or qualified for a higher rate.

"The higher the down payment, the better the chance of approval," said Bowman. "Cash is looked at more favorably than a trade-down." A trade-down is when a buyer uses an existing vehicle's value toward a new one.

If you don't have the money for a massive down payment, don't fret. You can still qualify for a bad credit auto loan. Applying online can help you get the car finance solutions that you need without coughing up a big chunk of money at the outset.