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GuideNew Cars

How Much Down Payment Should You Put?

There's a couple of good reasons why you want to make a large down payment on a new car.

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.

3 Steps Every Car Buyer Needs to Take to Save Maximum Money

The key to getting the best deal is to gather price or lease bids from as many local dealers as possible. Then shop that best price around until no one can beat it. Here are the steps:

Step 1 Get Prices From My Trusted Network

Select the vehicle you're interested in to see if there are local dealers in my network who will provide you with their best upfront price. You will get direct access to an internet sales manager who you can further negotiate with online (no need to visit dealership).
Select Vehicle to Get Local Pricing

Step 2 Get Prices From TrueCar / CarsDirect

TrueCar, and CarsDirect are my top 2 online price quote recommendations. These services show you pre-negotiated prices from dealers closest to you - and the deals are usually pretty decent. But remember, you can still negotiate further.

Step 3 Complete my Checklist

Follow this up with my checklist to make sure you squeeze out every last bit of savings.
- Gregg Fidan

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About The Author

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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