Most car loan providers and dealerships recommend that you make some sort of a down payment when buying a car. A substantial down payment not only helps you qualify for a lower interest rate, but it decreases the overall cost of your loan and prevents you from owing more than your car is worth. Keep reading to discover how much to put down on a car.<\/p>
The general rule of thumb is to pay 20% of the car\u2019s purchase price as a down payment.<\/p><\/blockquote>
While most dealerships and car loan lenders don\u2019t require a down payment, experts generally recommend the closer you can get to 20%, the better \u2014 but even 10% or less is better than nothing. A larger down payment reduces the amount you owe on your car loan, saving you thousands of dollars on interest in the long run. Having a down payment could even score you a lower interest rate on your loan.<\/p>
You should be realistic when thinking about how much to put down on a car. Base your decision on your lifestyle and budget \u2014 especially if you plan on buying a used car that won\u2019t depreciate as drastically. Look at your savings, the loan interest rate, your credit score and the type of car you\u2019re buying to help inform how much you put down. While 20% is a great goal, even a small down payment is better than none at all.<\/p>
How can I calculate how much to put down on a car?<\/h4>
Calculate your down payment by taking the price of the car and multiplying it by the percentage you plan on putting down.<\/p>
For example, say you want to buy a used car for $16,000<\/strong> with a down payment of 20%.<\/strong><\/p>
You\u2019ll multiply the sticker price by 0.2 \u2013 the decimal value of 20% \u2013 which gives you a total down payment of $3,200<\/b> (16,000 \u00d7 0.2 = 3,200).<\/p>
You can then subtract the down payment from the total cost of the car to see how much you need to borrow: $12,800<\/b> (16,000 \u2212 3,200 = 12,800).<\/p>
Finally, you can use our monthly payment calculator below to see how much you\u2019ll pay in interest over the life of the loan based on different rates and terms.<\/p>
\n\t\n\t\n\t\tCar loan payment calculator<\/h3>\n\t\tCalculate how much you could expect to pay each month on your car loan. To see how much you could save with a down payment, put the price of the vehicle minus your down payment in the Loan amount<\/em> field.<\/span>\n\t<\/div>\n\t<\/div>\n\t
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