How Much Down Payment Should You Put?
First, cars depreciate very quickly. If you don't put a decent down payment, you're likely going to owe more than the car is worth for at least the first 3 or 4 years of ownership. If you get into a situation where you have to sell the car during this time, you will have to pay off this liability - which could be a very big problem.
Second, by providing a large down payment, you reduce the interest you'll have to pay on a car loan. Depending on how much you put down, this can save you hundreds, even thousands of dollars over the life of the loan.
So what's the perfect down payment when buying a car?
Most experts agree you should put down at least 20% on a new car. This will help ensure you won't owe more than the car is worth through the life of your loan. On a used car, you should put down at least 10% up front.
Remember, these are the minimum amounts you should put down. The more you can afford, the better off you'll be.
My Recommendation for Car ShoppersTrueCar No-Haggle and Edmunds Price Promise are the quickest way to see the lowest car prices in your area. These sites show you no-haggle prices from dealers closest to you - and the deals are usually really good. This should be the first step you take when negotiating your car price. Follow this up with my checklist to make sure you squeeze out every last bit of savings.
- Gregg Fidan
About: Gregg Fidan
Gregg Fidan + is the founder of RealCarTips. After being ripped off on his first car purchase, he devoted several years to figuring out the best ways to avoid scams and negotiate the best car deals. He has written hundreds of articles on the subject of car buying and taught thousands of car shoppers how to get the best deals.
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