LendingTree is compensated by companies on this web site and this compensation may impact how and where offers appear on this locate ( such as the order ). LendingTree does not include all lenders, savings products, or lend options available in the market. LendingTree is compensated by companies on this site and this recompense may impact how and where offers appears on this site ( such as the order ). LendingTree does not include all lenders, savings products, or loanword options available in the market. editorial note : The message of this article is based on the author ’ mho opinions and recommendations alone. It may not have been reviewed, commissioned or otherwise endorsed by any of our network partners. contrary to popular impression, there ’ s no specify percentage for how much you should put down on a car. In the by, the want down requital on a cable car was often 20 % for modern and used vehicles. In recent years, however, drivers have been putting less money down, with requirements vitamin a low as 9 %.

The best answer to how much money should you put down on a cable car is “ arsenic much as you can reasonably afford. ” The more you put down, the more likely you are to be approved for a loan — particularly if you have badly credit. Making a larger down payment will besides save you money on interest in the long-run .

Here’s why you should put money down on a car

You may be able to purchase a car with a small down payment — or flush with no down payment — but there are a batch of well reasons why you should ​​make a down requital on a car. For one, the bigger the down payment, the less money you ’ ll have to borrow from a lender .
here ’ s what you stand to gain :

1. You’ll pay less interest. Interest charges are based on how much you owe on your loan — so the less money you borrow, the more you’ll save. Plus, making a larger down payment can result in getting approved for a lower interest rate, or even qualifying for a special rate incentive program through your dealership.
2. It can reduce your monthly payments. Paying more upfront can help reduce your monthly loan payment. According to Edmunds, you can expect your monthly payment to drop by roughly $15 to $18 for every $1,000 you put down.
3. It can be easier to get approved. Some lenders won’t approve you without a down payment, (or with one of less than 12%), and you may be limited to dealerships that offer extra-high interest rates on financing.
4. You’re less likely to be “underwater.” Being underwater — having negative equity — happens when you owe more money than your car is worth. Someone who doesn’t make a down payment can go underwater right away, since a new car’s value can drop as much as 30% in the first year. Making a larger down payment helps buyers avoid negative equity on their car loan and prevent them from facing major financial losses if the car gets totalled or stolen.

Can you get a car with no down payment?

Some car dealerships specialize in loans for no money down, but this type of loan may not result in getting the best consider. alternatively, reputable lenders may provide “ zero down ” loans to people with excellent credit. Be certain to weigh the pros and cons of no money down cars :

How to protect yourself if you buy a car with no money down

1. Consider gap insurance. With no down payment, you can go underwater as soon as you drive the car off the lot. If the car is totaled or stolen, standard insurance will only cover what the car is worth, meaning you’d have to pay the additional amount you owe to the lender out of your own pocket. Gap insurance can help you avoid having to pay off your negative equity.
2. Get a cosigner. Having a cosigner — a person who agrees to take full responsibility for the loan along with you — can help bring your rates down. While the lack of down payment makes you a risky borrower, having a second person cosign on the loan assures the lender of less risk.
3. Buy a cheaper vehicle. You can reduce your loan amount and financing charges by buying a cheaper car. To reduce your costs, look for an older model vehicle, a base trim model or opt for fewer features. Try focusing on the features you need and avoiding the expensive nice-to-haves.
4. Use a trade-in as your down payment. If you’re in a position to trade-in your current vehicle, the dealer may accept the car’s value as a down payment toward your new car. Just make sure to take the time and negotiate a fair price on your trade-in from the dealer. As an alternative, you could sell your current vehicle yourself and use the cash to put some money down on your new car.
5. Consider refinancing. If you get a loan with high fees or an expensive payment, refinancing can help. Once you’ve improved your credit by making on-time payments, or paid down some of your loan balance, you may want to apply for an auto refinance loan to help you save money.

Frequently asked questions

Can you buy a car with no money down?

Yes. Some dealerships specialize in no-money-down financing for buyers with poor credit — however, these loans tend to come with high finance charges. other dealerships may offer special “ zero down ” deals for buyers with excellent credit .

What is a good down payment on a car?

There is no set share, but experts by and large recommend paying adenine much as you can afford without depleting your emergency savings or putting your finances in hazard. however, you may find some lenders require a minimum of roughly 12 % for new cars and 9 % for secondhand cars .

What are acceptable forms of down payment for a car?

The most common imprint of toss off requital is cash or its equivalent. Dealerships generally accept personal checks, money orders or even credit rating cards. You can besides trade-in your vehicle as a imprint of down requital for your purchase .

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