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.
Each week, I'll keep you up-to-date on the latest car deals and news that might affect your purchase. This includes...
- Best Rebates, Incentives, and Lease Deals
- Latest Car Buying Scams and Tricks
- The Best & Worst Time to Buy a Car
- Which Cars You Should Avoid