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How Much Money Should You Put Down on a Car

Table of Contents

Are you wondering what’s the best downpayment for a car? In general, you can put down as much cash as you want for a down payment on a car. But that is if you can afford the amount that you want without affecting your finances.

There’s no magic number for how much money you should put down on a new or used car, but there are a few general guidelines that can help you decide how much to put down.

For example, when you’re buying a new car, strive to put at least 20% of the total price. For a used car, a 10% downpayment is good enough.

Is it better to make a large downpayment on a car?

In general, the more money you can put into a down payment, the better will your financial position be. But make sure you’re not going to compromise your savings or emergency fund when you make a large downpayment for a car.

How does the amount you put into your down payment matter?

The size of your down payment will affect your monthly car payments and the interest rate for the auto loan.

A larger down payment will lower your monthly payments and the total amount of interest associated with car purchases. But it’s important to make sure you’re not depleting your savings account too much.

On the other hand, a smaller down payment will raise your monthly payments and the total amount of interest you’ll pay for the car loan. But it would make sense if you don’t have enough cash saved up to make a larger down payment.

Likewise, you’ll pay less money if you buy a used car. On the other hand, your payment for a new car is much bigger than a used car.

How much should you put down on a car? It depends on your financial situation and what you’re comfortable with.

Why it’s better to put a larger down payment amount

If you’re struggling with the right amount you want to put into a new car, the rule of thumb for a substantial down payment is 20% of the new vehicle’s total price. This is according to a study guide note for certified public accountants (CPA) written by Bryce Welker, owner of CPA Exam Guy.

Advantages of a bigger down payment

Do you want to make a down payment but can’t decide how much? Here are some of the advantages you need to know when making down payments.

Lower monthly payments

The amount you finance will be lower, which will result in a lower monthly car payment.

You’ll have more equity

You’ll have more equity in your car if you put more money down, which could be helpful if you need to sell the car or trade in before the loan is paid off.

Offset initial depreciation

A new car’s value can drop by up to 20% or more as soon as you drive it off the dealer’s lot. The first few years are typically when a vehicle experiences the steepest depreciation.

So if you put down less, you’re likely to owe more than what your car is worth (upside down on your loan). A bigger downpayment can help offset the initial depreciation and put you in a better position when it comes time to trade in or sell your car.

Get better interest rates

The more money you put down, the lesser risk is for the lender. What does that mean? Lower risk means lower rates. Likewise, this will help you significantly if you’re aiming to score a 0% financing as this is only offered to a customer with a good credit score.

As a general rule, a larger downpayment is the best way to qualify for this kind of deal. If you have a low credit score, it’s best to build a good reputation with the lender first if you’re planning for a car loan.

Do you know your credit score? You can use Credit Karma to check your credit score.

Easy approval

A bigger down payment makes it possible to get you approved quicker just like being offered a lower monthly payment according to Logan Murray, a financial planner at Pocket Project. A higher downpayment will not just lead to easier and quicker approval but you could even get offered the best deals.

Reduce loan-to-value ratio

Car loans depend greatly on the car’s purchase price. This is why lenders put a limit on the car buyer about how much they are allowed for a car loan.

This is called LTV or loan-to-value ratio. Every car dealership has its own LTV policy with its loan approval. For this reason, a bigger down payment can help you qualify for the car dealership’s LTV requirement.

Disadvantages of lower down payment

You’ll have higher monthly payments

With a smaller down payment, you’ll likely need to finance more of the car’s cost, which will result in a higher monthly car payment.

You’ll pay more interest

A bigger loan amount means you’ll pay more interest on your auto loan. Try to calculate how much this will cost you in the long run so you can factor that into your decision.

You may need private mortgage insurance (PMI)

If you’re putting down less than 20%, you may be required to get PMI, which is insurance that protects the lender if you default on your loan. This will increase your monthly payment even more.

How much you put up for your downpayment will drastically affect your monthly payment. That also includes your interest payments. But a good down payment also has its perks that can help you save more in the long run.

It’s best to analyze your financial situation and what you’re comfortable with before deciding on the right amount for your down payment. This is especially true if you have bad credit.

Downpayments and Loan Value

The loan value is the percentage of the car’s purchase price that you finance. For example, if you finance $15,000 on a $20,000 car, your loan value would be 75%.

Loan Value = Vehicle Purchase Price – Down Payment

Your loan value will directly affect your monthly loan payment and the amount of interest you’ll pay on your loan. A smaller loan value means a lower monthly payment and less interest paid over the life of the loan.

How much downpayment should you put down if you have poor credit?

If you have poor credit, it’s still possible to put down a small down payment and finance a car. However, you may be required to get private mortgage insurance (PMI) if you’re putting down less than 20%. This will increase your monthly payment.

You may also look at new car replacement coverage, which protects you if your car is totaled in an accident. This can be helpful if you’re worried about being upside down on your loan.

It’s best to talk to a lender or car dealer to see what options are available to you.

You may also be offered a higher interest rate on your loan. It’s important to compare rates from different lenders to make sure you’re getting the best deal.

If you have poor credit, it may be difficult to get approved for a loan with a low down payment. You may need to work on building your credit scores first before applying for a car loan.

Should I choose the zero-down payment?

Car dealerships will always bring buyers in. That means they would go as far as using the zero-down payments scheme. However, only choose this route if you’re purchasing the car with cash outright.

Likewise, this is also a good option if the dealer doesn’t offer 0% financing. This will help you save money from interest-earning options when making payments on the vehicle. While this will help you earn interest on your money, make sure you leave the money you saved for the car.

A sizable down payment remains the best way to buy a car. This will help you avoid an upside-down loan, get a lower interest rate, and even reduce the monthly payments.

It could also affect your loan balance and give you more leeway when it comes to negotiating the final purchase price of the car.

If you have the cash on hand, go for it. If not, start setting money aside so you can make a bigger down payment on your next car.

Down payment or Auto Loans Extension

Car dealers will always have another alternative if you can’t afford the average down payment. For this reason, we highly recommend never settling for an extended term. In perspective, a car dealership will offer an extension of your term by a few more years.

While this option will significantly lower your monthly car loan payment, you need to consider the hefty amount of cash lost because of additional interest and other finance charges. While conventional wisdom tells us that a shorter-term loan is better, in this case, it might not be the smartest move.

Some offers could go as much as 84 to 90 months for a zero-down payment option. Avoid falling for this scheme otherwise, your finances will suffer.

A longer loan will also hurt your credit score. A shorter term will help you build equity in your car faster and improve your credit score more quickly.

If you’re struggling to come up with the cash for a down payment, consider saving up over time or looking into financing options. This could even prove to be your financial protection.

Putting money down on a car can help you get a lower interest rate and avoid being upside-down on your loan. This works if you’re buying either a new or used car. A used car is typically a cheaper car to buy outright, so you may not need to finance as much. You can also put down a larger down payment on a used car to lower your loan amount.

When you’re ready to buy, figure out how much you can afford for a monthly payment, and don’t be afraid to negotiate with the dealer.

Why do most people fear putting a substantial down payment?

Most people believe car dealers will steal their money away if they put down a larger down payment amount. Here’s our advice. Make sure to keep track of your down payment. That’s it!

Never tell a car salesman about the down payment you’re planning to make before you agree to the car purchase price. If they ask about the down payment, tell them you don’t have the actual cash amount at the moment.

Why does a salesman want to know if you have a down payment? This will help the sales manager control the numbers to favor the car dealership. Your interest charges will be lower, and the sales manager will give you a “good deal.”

In other words, the car dealership uses the down payment to generate more revenue for themselves. So, if you want to get the best possible deal on your car purchase, never reveal how much money you’re planning to put down as a down payment.

What to do if a salesman offers confusing presentations

Salesmen would often introduce confusing presentations like the “four-square” technique among others. The best way to get out of this situation is to tell them directly that you only want to know the lowest selling price of the car.

You also want to tell them that you don’t want to know about the payments. Moreover, only speak about the down payment amounts once you know the new car purchase price.

Make sure that your down payment is subtracted from the purchase price along with other fees like title, tax, license, etc. Keep in mind that there are unethical car dealers who will steal money from you. They will always try to manipulate the figures in the transaction.

New cars have a higher down payment requirement because they depreciate so quickly.

The biggest factor in how much money you should put down on a car is how long you plan to keep the vehicle. If you only plan to keep the car for a few years, it doesn’t make sense to pay extra now for something that will be worth much less later.

On the other hand, if you plan to keep the car for a long time, a larger down payment can help you get a lower interest rate and avoid being upside-down on your loan. This is especially important if you’re buying a used car, which is typically cheaper to buy outright but may have a higher interest rate.

In Conclusion

All in all, the rule of thumb for a car down payment is the bigger the better. However, if you don’t have enough money, taking the 20% down payment for a new vehicle and a 10% down payment for used cars remains a significantly good number.

Do you want to get an idea about new cars’ down payments? Try a car downpayment calculator. This will help you decide how much to put up with the car down payment without affecting your finances.

How Much Money Should You Put Down on a Car?

Are you wondering what’s the best downpayment for a car? In general, you can put down as much cash as you want for a down payment on a car. But that is if you can afford the amount that you want without affecting your finances.

There’s no magic number for how much money you should put down on a new or used car, but there are a few general guidelines that can help you decide how much to put down.

For example, when you’re buying a new car, strive to put at least 20% of the total price. For a used car, a 10% downpayment is good enough.

Is it better to make a large downpayment on a car?

In general, the more money you can put into a down payment, the better will your financial position be. But make sure you’re not going to compromise your savings or emergency fund when you make a large downpayment for a car.

How does the amount you put into your down payment matter?

The size of your down payment will affect your monthly car payments and the interest rate for the auto loan.

A larger down payment will lower your monthly payments and the total amount of interest associated with car purchases. But it’s important to make sure you’re not depleting your savings account too much.

On the other hand, a smaller down payment will raise your monthly payments and the total amount of interest you’ll pay for the car loan. But it would make sense if you don’t have enough cash saved up to make a larger down payment.

Likewise, you’ll pay less money if you buy a used car. On the other hand, your payment for a new car is much bigger than a used car.

How much should you put down on a car? It depends on your financial situation and what you’re comfortable with.

Why it’s better to put a larger down payment amount

If you’re struggling with the right amount you want to put into a new car, the rule of thumb for a substantial down payment is 20% of the new vehicle’s total price. This is according to a study guide note for certified public accountants (CPA) written by Bryce Welker, owner of CPA Exam Guy.

Advantages of a bigger down payment

Do you want to make a down payment but can’t decide how much? Here are some of the advantages you need to know when making down payments.

Lower monthly payments

The amount you finance will be lower, which will result in a lower monthly car payment.

You’ll have more equity

You’ll have more equity in your car if you put more money down, which could be helpful if you need to sell the car or trade in before the loan is paid off.

Offset initial depreciation

A new car’s value can drop by up to 20% or more as soon as you drive it off the dealer’s lot. The first few years are typically when a vehicle experiences the steepest depreciation.

So if you put down less, you’re likely to owe more than what your car is worth (upside down on your loan). A bigger downpayment can help offset the initial depreciation and put you in a better position when it comes time to trade in or sell your car.

Get better interest rates

The more money you put down, the lesser risk is for the lender. What does that mean? Lower risk means lower rates. Likewise, this will help you significantly if you’re aiming to score a 0% financing as this is only offered to a customer with a good credit score.

As a general rule, a larger downpayment is the best way to qualify for this kind of deal. If you have a low credit score, it’s best to build a good reputation with the lender first if you’re planning for a car loan.

Do you know your credit score? You can use Credit Karma to check your credit score.

Easy approval

A bigger down payment makes it possible to get you approved quicker just like being offered a lower monthly payment according to Logan Murray, a financial planner at Pocket Project. A higher downpayment will not just lead to easier and quicker approval but you could even get offered the best deals.

Reduce loan-to-value ratio

Car loans depend greatly on the car’s purchase price. This is why lenders put a limit on the car buyer about how much they are allowed for a car loan.

This is called LTV or loan-to-value ratio. Every car dealership has its own LTV policy with its loan approval. For this reason, a bigger down payment can help you qualify for the car dealership’s LTV requirement.

Disadvantages of lower down payment

You’ll have higher monthly payments

With a smaller down payment, you’ll likely need to finance more of the car’s cost, which will result in a higher monthly car payment.

You’ll pay more interest

A bigger loan amount means you’ll pay more interest on your auto loan. Try to calculate how much this will cost you in the long run so you can factor that into your decision.

You may need private mortgage insurance (PMI)

If you’re putting down less than 20%, you may be required to get PMI, which is insurance that protects the lender if you default on your loan. This will increase your monthly payment even more.

How much you put up for your downpayment will drastically affect your monthly payment. That also includes your interest payments. But a good down payment also has its perks that can help you save more in the long run.

It’s best to analyze your financial situation and what you’re comfortable with before deciding on the right amount for your down payment. This is especially true if you have bad credit.

Downpayments and Loan Value

The loan value is the percentage of the car’s purchase price that you finance. For example, if you finance $15,000 on a $20,000 car, your loan value would be 75%.

Loan Value = Vehicle Purchase Price – Down Payment

Your loan value will directly affect your monthly loan payment and the amount of interest you’ll pay on your loan. A smaller loan value means a lower monthly payment and less interest paid over the life of the loan.

How much downpayment should you put down if you have poor credit?

If you have poor credit, it’s still possible to put down a small down payment and finance a car. However, you may be required to get private mortgage insurance (PMI) if you’re putting down less than 20%. This will increase your monthly payment.

You may also look at new car replacement coverage, which protects you if your car is totaled in an accident. This can be helpful if you’re worried about being upside down on your loan.

It’s best to talk to a lender or car dealer to see what options are available to you.

You may also be offered a higher interest rate on your loan. It’s important to compare rates from different lenders to make sure you’re getting the best deal.

If you have poor credit, it may be difficult to get approved for a loan with a low down payment. You may need to work on building your credit scores first before applying for a car loan.

Should I choose the zero-down payment?

Car dealerships will always bring buyers in. That means they would go as far as using the zero-down payments scheme. However, only choose this route if you’re purchasing the car with cash outright.

Likewise, this is also a good option if the dealer doesn’t offer 0% financing. This will help you save money from interest-earning options when making payments on the vehicle. While this will help you earn interest on your money, make sure you leave the money you saved for the car.

A sizable down payment remains the best way to buy a car. This will help you avoid an upside-down loan, get a lower interest rate, and even reduce the monthly payments.

It could also affect your loan balance and give you more leeway when it comes to negotiating the final purchase price of the car.

If you have the cash on hand, go for it. If not, start setting money aside so you can make a bigger down payment on your next car.

Down payment or Auto Loans Extension

Car dealers will always have another alternative if you can’t afford the average down payment. For this reason, we highly recommend never settling for an extended term. In perspective, a car dealership will offer an extension of your term by a few more years.

While this option will significantly lower your monthly car loan payment, you need to consider the hefty amount of cash lost because of additional interest and other finance charges. While conventional wisdom tells us that a shorter-term loan is better, in this case, it might not be the smartest move.

Some offers could go as much as 84 to 90 months for a zero-down payment option. Avoid falling for this scheme otherwise, your finances will suffer.

A longer loan will also hurt your credit score. A shorter term will help you build equity in your car faster and improve your credit score more quickly.

If you’re struggling to come up with the cash for a down payment, consider saving up over time or looking into financing options. This could even prove to be your financial protection.

Putting money down on a car can help you get a lower interest rate and avoid being upside-down on your loan. This works if you’re buying either a new or used car. A used car is typically a cheaper car to buy outright, so you may not need to finance as much. You can also put down a larger down payment on a used car to lower your loan amount.

When you’re ready to buy, figure out how much you can afford for a monthly payment, and don’t be afraid to negotiate with the dealer.

Why do most people fear putting a substantial down payment?

Most people believe car dealers will steal their money away if they put down a larger down payment amount. Here’s our advice. Make sure to keep track of your down payment. That’s it!

Never tell a car salesman about the down payment you’re planning to make before you agree to the car purchase price. If they ask about the down payment, tell them you don’t have the actual cash amount at the moment.

Why does a salesman want to know if you have a down payment? This will help the sales manager control the numbers to favor the car dealership. Your interest charges will be lower, and the sales manager will give you a “good deal.”

In other words, the car dealership uses the down payment to generate more revenue for themselves. So, if you want to get the best possible deal on your car purchase, never reveal how much money you’re planning to put down as a down payment.

What to do if a salesman offers confusing presentations

Salesmen would often introduce confusing presentations like the “four-square” technique among others. The best way to get out of this situation is to tell them directly that you only want to know the lowest selling price of the car.

You also want to tell them that you don’t want to know about the payments. Moreover, only speak about the down payment amounts once you know the new car purchase price.

Make sure that your down payment is subtracted from the purchase price along with other fees like title, tax, license, etc. Keep in mind that there are unethical car dealers who will steal money from you. They will always try to manipulate the figures in the transaction.

New cars have a higher down payment requirement because they depreciate so quickly.

The biggest factor in how much money you should put down on a car is how long you plan to keep the vehicle. If you only plan to keep the car for a few years, it doesn’t make sense to pay extra now for something that will be worth much less later.

On the other hand, if you plan to keep the car for a long time, a larger down payment can help you get a lower interest rate and avoid being upside-down on your loan. This is especially important if you’re buying a used car, which is typically cheaper to buy outright but may have a higher interest rate.

In Conclusion

All in all, the rule of thumb for a car down payment is the bigger the better. However, if you don’t have enough money, taking the 20% down payment for a new vehicle and a 10% down payment for used cars remains a significantly good number.

Do you want to get an idea about new cars’ down payments? Try a car downpayment calculator. This will help you decide how much to put up with the car down payment without affecting your finances.

How Much Money Should You Put Down on a Car?

Are you wondering what’s the best downpayment for a car? In general, you can put down as much cash as you want for a down payment on a car. But that is if you can afford the amount that you want without affecting your finances.

There’s no magic number for how much money you should put down on a new or used car, but there are a few general guidelines that can help you decide how much to put down.

For example, when you’re buying a new car, strive to put at least 20% of the total price. For a used car, a 10% downpayment is good enough.

Is it better to make a large downpayment on a car?

In general, the more money you can put into a down payment, the better will your financial position be. But make sure you’re not going to compromise your savings or emergency fund when you make a large downpayment for a car.

How does the amount you put into your down payment matter?

The size of your down payment will affect your monthly car payments and the interest rate for the auto loan.

A larger down payment will lower your monthly payments and the total amount of interest associated with car purchases. But it’s important to make sure you’re not depleting your savings account too much.

On the other hand, a smaller down payment will raise your monthly payments and the total amount of interest you’ll pay for the car loan. But it would make sense if you don’t have enough cash saved up to make a larger down payment.

Likewise, you’ll pay less money if you buy a used car. On the other hand, your payment for a new car is much bigger than a used car.

How much should you put down on a car? It depends on your financial situation and what you’re comfortable with.

Why it’s better to put a larger down payment amount

If you’re struggling with the right amount you want to put into a new car, the rule of thumb for a substantial down payment is 20% of the new vehicle’s total price. This is according to a study guide note for certified public accountants (CPA) written by Bryce Welker, owner of CPA Exam Guy.

Advantages of a bigger down payment

Do you want to make a down payment but can’t decide how much? Here are some of the advantages you need to know when making down payments.

Lower monthly payments

The amount you finance will be lower, which will result in a lower monthly car payment.

You’ll have more equity

You’ll have more equity in your car if you put more money down, which could be helpful if you need to sell the car or trade in before the loan is paid off.

Offset initial depreciation

A new car’s value can drop by up to 20% or more as soon as you drive it off the dealer’s lot. The first few years are typically when a vehicle experiences the steepest depreciation.

So if you put down less, you’re likely to owe more than what your car is worth (upside down on your loan). A bigger downpayment can help offset the initial depreciation and put you in a better position when it comes time to trade in or sell your car.

Get better interest rates

The more money you put down, the lesser risk is for the lender. What does that mean? Lower risk means lower rates. Likewise, this will help you significantly if you’re aiming to score a 0% financing as this is only offered to a customer with a good credit score.

As a general rule, a larger downpayment is the best way to qualify for this kind of deal. If you have a low credit score, it’s best to build a good reputation with the lender first if you’re planning for a car loan.

Do you know your credit score? You can use Credit Karma to check your credit score.

Easy approval

A bigger down payment makes it possible to get you approved quicker just like being offered a lower monthly payment according to Logan Murray, a financial planner at Pocket Project. A higher downpayment will not just lead to easier and quicker approval but you could even get offered the best deals.

Reduce loan-to-value ratio

Car loans depend greatly on the car’s purchase price. This is why lenders put a limit on the car buyer about how much they are allowed for a car loan.

This is called LTV or loan-to-value ratio. Every car dealership has its own LTV policy with its loan approval. For this reason, a bigger down payment can help you qualify for the car dealership’s LTV requirement.

Disadvantages of lower down payment

You’ll have higher monthly payments

With a smaller down payment, you’ll likely need to finance more of the car’s cost, which will result in a higher monthly car payment.

You’ll pay more interest

A bigger loan amount means you’ll pay more interest on your auto loan. Try to calculate how much this will cost you in the long run so you can factor that into your decision.

You may need private mortgage insurance (PMI)

If you’re putting down less than 20%, you may be required to get PMI, which is insurance that protects the lender if you default on your loan. This will increase your monthly payment even more.

How much you put up for your downpayment will drastically affect your monthly payment. That also includes your interest payments. But a good down payment also has its perks that can help you save more in the long run.

It’s best to analyze your financial situation and what you’re comfortable with before deciding on the right amount for your down payment. This is especially true if you have bad credit.

Downpayments and Loan Value

The loan value is the percentage of the car’s purchase price that you finance. For example, if you finance $15,000 on a $20,000 car, your loan value would be 75%.

Loan Value = Vehicle Purchase Price – Down Payment

Your loan value will directly affect your monthly loan payment and the amount of interest you’ll pay on your loan. A smaller loan value means a lower monthly payment and less interest paid over the life of the loan.

How much downpayment should you put down if you have poor credit?

If you have poor credit, it’s still possible to put down a small down payment and finance a car. However, you may be required to get private mortgage insurance (PMI) if you’re putting down less than 20%. This will increase your monthly payment.

You may also look at new car replacement coverage, which protects you if your car is totaled in an accident. This can be helpful if you’re worried about being upside down on your loan.

It’s best to talk to a lender or car dealer to see what options are available to you.

You may also be offered a higher interest rate on your loan. It’s important to compare rates from different lenders to make sure you’re getting the best deal.

If you have poor credit, it may be difficult to get approved for a loan with a low down payment. You may need to work on building your credit scores first before applying for a car loan.

Should I choose the zero-down payment?

Car dealerships will always bring buyers in. That means they would go as far as using the zero-down payments scheme. However, only choose this route if you’re purchasing the car with cash outright.

Likewise, this is also a good option if the dealer doesn’t offer 0% financing. This will help you save money from interest-earning options when making payments on the vehicle. While this will help you earn interest on your money, make sure you leave the money you saved for the car.

A sizable down payment remains the best way to buy a car. This will help you avoid an upside-down loan, get a lower interest rate, and even reduce the monthly payments.

It could also affect your loan balance and give you more leeway when it comes to negotiating the final purchase price of the car.

If you have the cash on hand, go for it. If not, start setting money aside so you can make a bigger down payment on your next car.

Down payment or Auto Loans Extension

Car dealers will always have another alternative if you can’t afford the average down payment. For this reason, we highly recommend never settling for an extended term. In perspective, a car dealership will offer an extension of your term by a few more years.

While this option will significantly lower your monthly car loan payment, you need to consider the hefty amount of cash lost because of additional interest and other finance charges. While conventional wisdom tells us that a shorter-term loan is better, in this case, it might not be the smartest move.

Some offers could go as much as 84 to 90 months for a zero-down payment option. Avoid falling for this scheme otherwise, your finances will suffer.

A longer loan will also hurt your credit score. A shorter term will help you build equity in your car faster and improve your credit score more quickly.

If you’re struggling to come up with the cash for a down payment, consider saving up over time or looking into financing options. This could even prove to be your financial protection.

Putting money down on a car can help you get a lower interest rate and avoid being upside-down on your loan. This works if you’re buying either a new or used car. A used car is typically a cheaper car to buy outright, so you may not need to finance as much. You can also put down a larger down payment on a used car to lower your loan amount.

When you’re ready to buy, figure out how much you can afford for a monthly payment, and don’t be afraid to negotiate with the dealer.

Why do most people fear putting a substantial down payment?

Most people believe car dealers will steal their money away if they put down a larger down payment amount. Here’s our advice. Make sure to keep track of your down payment. That’s it!

Never tell a car salesman about the down payment you’re planning to make before you agree to the car purchase price. If they ask about the down payment, tell them you don’t have the actual cash amount at the moment.

Why does a salesman want to know if you have a down payment? This will help the sales manager control the numbers to favor the car dealership. Your interest charges will be lower, and the sales manager will give you a “good deal.”

In other words, the car dealership uses the down payment to generate more revenue for themselves. So, if you want to get the best possible deal on your car purchase, never reveal how much money you’re planning to put down as a down payment.

What to do if a salesman offers confusing presentations

Salesmen would often introduce confusing presentations like the “four-square” technique among others. The best way to get out of this situation is to tell them directly that you only want to know the lowest selling price of the car.

You also want to tell them that you don’t want to know about the payments. Moreover, only speak about the down payment amounts once you know the new car purchase price.

Make sure that your down payment is subtracted from the purchase price along with other fees like title, tax, license, etc. Keep in mind that there are unethical car dealers who will steal money from you. They will always try to manipulate the figures in the transaction.

New cars have a higher down payment requirement because they depreciate so quickly.

The biggest factor in how much money you should put down on a car is how long you plan to keep the vehicle. If you only plan to keep the car for a few years, it doesn’t make sense to pay extra now for something that will be worth much less later.

On the other hand, if you plan to keep the car for a long time, a larger down payment can help you get a lower interest rate and avoid being upside-down on your loan. This is especially important if you’re buying a used car, which is typically cheaper to buy outright but may have a higher interest rate.

In Conclusion

All in all, the rule of thumb for a car down payment is the bigger the better. However, if you don’t have enough money, taking the 20% down payment for a new vehicle and a 10% down payment for used cars remains a significantly good number.

Do you want to get an idea about new cars’ down payments? Try a car downpayment calculator. This will help you decide how much to put up with the car down payment without affecting your finances.

About Me

I've been in car sales and finance for over 20 years, working at the highest volume dealerships in the nation including Fletcher Jones, DCH and more. Want to pick my brain on finding cars, negotiating cars, and structuring car deals?

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