# Is there a limit to how -little- a bank will finance on a car? **URL:** \ **Category:** Factual Questions\ **Created:** [March 16, 2025, 10:09pm UTC](https://boards.straightdope.com/t/is-there-a-limit-to-how-little-a-bank-will-finance-on-a-car/1015686 "2025-03-16T22:09:42Z")\ **Posts on this page:** 18\ **Page:** 1
**Author:** ![HeyHomie](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/heyhomie/32/207_2.png) [@HeyHomie](https://boards.straightdope.com/u/HeyHomie)\ **Post date:** [March 16, 2025, 10:09pm UTC](https://boards.straightdope.com/t/is-there-a-limit-to-how-little-a-bank-will-finance-on-a-car/1015686/1 "2025-03-16T22:09:42Z")
Let’s say Joe Buyer has his eyes on a $20k car. He’s emptied his savings account, pulled all the cash out from under his mattress, scrounged up loose change, etc. He has $19k, and the dealer won’t come down on the price. Will a bank finance such a trivial loan? Will they charge him exhorbitant interest since they wouldn’t otherwise make as much money as they would if they’d arranged a more traditional loan? ---
**Author:** ![scudsucker](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/scudsucker/32/14101_2.png) [@scudsucker](https://boards.straightdope.com/u/scudsucker)\ **Post date:** [March 17, 2025, 12:42am UTC](https://boards.straightdope.com/t/is-there-a-limit-to-how-little-a-bank-will-finance-on-a-car/1015686/2 "2025-03-17T00:42:43Z")
I guess it depends on country. Here, in the third world, the bank would leap on the opportunity, provided you are credit worthy. Microloans are a thing. Interest rates are going to be shitty, though. We have a thriving legal “loan shark” industry where interest of 19% or more is not unprecedented. ---
**Author:** ![Schnitte](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/schnitte/32/9033_2.png) [@Schnitte](https://boards.straightdope.com/u/Schnitte)\ **Post date:** [March 17, 2025, 9:36am UTC](https://boards.straightdope.com/t/is-there-a-limit-to-how-little-a-bank-will-finance-on-a-car/1015686/3 "2025-03-17T09:36:16Z")
I doubt they’d refuse to lend altogether - after all, lending 1k on a car worth 20k is a pretty good exposure for the bank from a risk perspective. But it might indeed be that they charge higher interest than they would on a larger loan, to cover the administrative costs of the loan. ---
**Author:** ![Napier](https://avatars.discourse-cdn.com/v4/letter/n/ce73a5/32.png) [@Napier](https://boards.straightdope.com/u/Napier)\ **Post date:** [March 17, 2025, 12:04pm UTC](https://boards.straightdope.com/t/is-there-a-limit-to-how-little-a-bank-will-finance-on-a-car/1015686/4 "2025-03-17T12:04:45Z")
I bought a phone and they offered a significant cash bonus if it was financed, even partly. “If I finance a dollar of it?” “Uh, yes.” So I financed one dollar with a 5 year term, and got all the rigamarole of a loan set up. I was writing checks for pennies. Then I inquired whether I could pay off the loan prematurely, and they said yes. I had to sign a bunch of things saying I understood my decision couldn’t be revoked etc etc. ---
**Author:** ![TokyoBayer](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/tokyobayer/32/13989_2.png) [@TokyoBayer](https://boards.straightdope.com/u/TokyoBayer)\ **Post date:** [March 17, 2025, 12:25pm UTC](https://boards.straightdope.com/t/is-there-a-limit-to-how-little-a-bank-will-finance-on-a-car/1015686/5 "2025-03-17T12:25:13Z")
Just a quick check online and banks are offering loans for cars starting from 100,000 yen which is about $675. ---
**Author:** ![Coriolanus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/coriolanus/32/18769_2.png) [@Coriolanus](https://boards.straightdope.com/u/Coriolanus)\ **Post date:** [March 17, 2025, 1:07pm UTC](https://boards.straightdope.com/t/is-there-a-limit-to-how-little-a-bank-will-finance-on-a-car/1015686/6 "2025-03-17T13:07:04Z")
Maybe not much below $1,000 or so, yet I did buy a new car with over 90% cash and financed the rest as I didn’t want to close out some stock positions. ---
**Author:** ![Mighty\_Mouse](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mighty_mouse/32/7776_2.png) [@Mighty\_Mouse](https://boards.straightdope.com/u/Mighty_Mouse)\ **Post date:** [March 17, 2025, 1:35pm UTC](https://boards.straightdope.com/t/is-there-a-limit-to-how-little-a-bank-will-finance-on-a-car/1015686/7 "2025-03-17T13:35:07Z")
My parents first car after immigration to the US was $5400 and they financed the $400. Because they had no credit history and couldn’t get credit anywhere. A used car at a new car dealership. The interest rate was 24.9%. I assumed that was the maximum allowed by law, but I can’t find any support for it now. They paid it off in a few months even though people were telling them that would damage their credit! This was almost 40 years ago and banks were paying 8% on savings accounts, so the whole frame of reference was different. ---
**Author:** ![Saint\_Cad](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/saint_cad/32/18907_2.png) [@Saint\_Cad](https://boards.straightdope.com/u/Saint_Cad)\ **Post date:** [March 17, 2025, 1:54pm UTC](https://boards.straightdope.com/t/is-there-a-limit-to-how-little-a-bank-will-finance-on-a-car/1015686/8 "2025-03-17T13:54:49Z")
Worst case scenario would be to have the bank finance the car then use the case to make a lump-sum payment (principal only of course) ---
**Author:** ![filmore](https://avatars.discourse-cdn.com/v4/letter/f/7993a0/32.png) [@filmore](https://boards.straightdope.com/u/filmore)\ **Post date:** [March 17, 2025, 2:01pm UTC](https://boards.straightdope.com/t/is-there-a-limit-to-how-little-a-bank-will-finance-on-a-car/1015686/9 "2025-03-17T14:01:21Z")
This sounds like a scenario where you’d use a personal line of credit. Assuming you have good credit, your bank will set a certain credit limit from which you can take out funds. You’ll have to pay it back with interest. It’s kind of like taking a cash advance from your credit card, but with a lower interest rate. Getting a car loan for such a small amount doesn’t seem worth it because of the overhead. There’s paperwork that needs to be filed so that the bank is the lien holder, and then the title needs to be transferred to you when the loan is paid off. ---
**Author:** ![Turki-lurki](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/turki-lurki/32/7168_2.png) [@Turki-lurki](https://boards.straightdope.com/u/Turki-lurki)\ **Post date:** [March 17, 2025, 2:03pm UTC](https://boards.straightdope.com/t/is-there-a-limit-to-how-little-a-bank-will-finance-on-a-car/1015686/10 "2025-03-17T14:03:38Z")
Credit cards are routinely that high in the US. Yep, they are loan sharks. Government approved. ---
**Author:** ![Jasmine](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/jasmine/32/2964_2.png) [@Jasmine](https://boards.straightdope.com/u/Jasmine)\ **Post date:** [March 17, 2025, 2:15pm UTC](https://boards.straightdope.com/t/is-there-a-limit-to-how-little-a-bank-will-finance-on-a-car/1015686/11 "2025-03-17T14:15:37Z")
If not, and since he is only one thousand short of what he needs, he could just charge it to a VISA or MC. ---
**Author:** ![Saint\_Cad](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/saint_cad/32/18907_2.png) [@Saint\_Cad](https://boards.straightdope.com/u/Saint_Cad)\ **Post date:** [March 17, 2025, 4:30pm UTC](https://boards.straightdope.com/t/is-there-a-limit-to-how-little-a-bank-will-finance-on-a-car/1015686/12 "2025-03-17T16:30:14Z")
> [@Turki-lurki](#): > > Credit cards are routinely that high in the US. Yep, they are loan sharks. Government approved. You can blame SCOTUS’s ruling in _Marquette National Bank of Minneapolis v First of Omaha Service Corp._ for that. ---
**Author:** ![LSLGuy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lslguy/32/5813_2.png) [@LSLGuy](https://boards.straightdope.com/u/LSLGuy)\ **Post date:** [March 17, 2025, 5:15pm UTC](https://boards.straightdope.com/t/is-there-a-limit-to-how-little-a-bank-will-finance-on-a-car/1015686/13 "2025-03-17T17:15:48Z")
> [@Saint\_Cad](#): > > Worst case scenario would be to have the bank finance the car then use the case to make a lump-sum payment (principal only of course) I’m not sure which way you meant that “worst” to apply. If I was the person in the OP’s hypothetical who (foolishly IMO) wanted to blow all his cash on the car and finance the minimum I’d do it this way … I’d find out what financing amount the bank would charge me the lowest interest rate for. Then finance that minimum amount that got the best rate and make a down payment for the balance. Then once I had completed the purchase and had the car and the loan, I’d pay the lender all the rest of my free cash as an early principal payment. So I get the lowest rate, and the lowest balance. Depending on the details of how the loan is written, you may be able to pay the tiny remaining balance of quickly or slowly depending on what your cash flow capabilities are. ---
**Author:** ![Saint\_Cad](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/saint_cad/32/18907_2.png) [@Saint\_Cad](https://boards.straightdope.com/u/Saint_Cad)\ **Post date:** [March 17, 2025, 6:04pm UTC](https://boards.straightdope.com/t/is-there-a-limit-to-how-little-a-bank-will-finance-on-a-car/1015686/14 "2025-03-17T18:04:50Z")
> [@LSLGuy](#): > > I’m not sure which way you meant that “worst” to apply. From the OP, the bank will not auto loan such a small amount ---
**Author:** ![filmore](https://avatars.discourse-cdn.com/v4/letter/f/7993a0/32.png) [@filmore](https://boards.straightdope.com/u/filmore)\ **Post date:** [March 17, 2025, 7:13pm UTC](https://boards.straightdope.com/t/is-there-a-limit-to-how-little-a-bank-will-finance-on-a-car/1015686/15 "2025-03-17T19:13:26Z")
From looking around, it seems like banks have a minimum of $3-5000 for a car loan. I would not be surprised if an auto dealer might do loans smaller than that through their in-house financing since it would help close the deal. ---
**Author:** ![Hampshire](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hampshire/32/4887_2.png) [@Hampshire](https://boards.straightdope.com/u/Hampshire)\ **Post date:** [March 18, 2025, 2:24pm UTC](https://boards.straightdope.com/t/is-there-a-limit-to-how-little-a-bank-will-finance-on-a-car/1015686/16 "2025-03-18T14:24:42Z")
> [@LSLGuy](#): > > I’d find out what financing amount the bank would charge me the lowest interest rate for. Then finance that minimum amount that got the best rate and make a down payment for the balance. Then once I had completed the purchase and had the car and the loan, I’d pay the lender all the rest of my free cash as an early principal payment. We did something sorta similar with my wife’s car. We wanted a 4-year loan (48 payments) but for whatever reason they were offering a lower interest rate if you took a 6-year loan. So we took that, I ran the numbers to figure out how more principal payment to add each month, made that my new monthly payment, and it will be paid off in 4 years. ---
**Author:** ![Saint\_Cad](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/saint_cad/32/18907_2.png) [@Saint\_Cad](https://boards.straightdope.com/u/Saint_Cad)\ **Post date:** [March 18, 2025, 4:08pm UTC](https://boards.straightdope.com/t/is-there-a-limit-to-how-little-a-bank-will-finance-on-a-car/1015686/17 "2025-03-18T16:08:32Z")
> [@Hampshire](#): > > We did something sorta similar with my wife’s car. We wanted a 4-year loan (48 payments) but for whatever reason they were offering a lower interest rate if you took a 6-year loan. Isn’t that the opposite of what normally happens? ---
**Author:** ![Hampshire](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hampshire/32/4887_2.png) [@Hampshire](https://boards.straightdope.com/u/Hampshire)\ **Post date:** [March 18, 2025, 9:14pm UTC](https://boards.straightdope.com/t/is-there-a-limit-to-how-little-a-bank-will-finance-on-a-car/1015686/18 "2025-03-18T21:14:32Z")
That’s what I always thought but whatever financial institution this dealer was working with was only offering their promotional rate on a 72-month loan and didn’t even offer a 48. I assume they thought most would jump at the chance to have a lower monthly payment even if they would pay more interest in the long run.