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Can I use money from a car loan to make a down payment on the vehicle?

I'd like to make a down payment on a car, but I don't have much cash to spare. Can I use my car loan money for the down payment?

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Johnny Puckett · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Most lenders will not let you use money from a loan as a down payment because it defeats the purpose of a down payment. When a borrower uses cash for a down payment, they have more to lose if they default on the loan. This makes the loan less risky for the lender and allows them to offer better interest rates and terms.
There are lenders that offer 100% financing, but these loans usually have higher interest rates and stricter credit-score requirements.
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