As a general rule of thumb, it's recommended that you put down at least 20% on a new vehicle, and at least 10% on a used car. Depending on the car's selling price, this could mean shelling out quite a bit of cash.
Since $30,000 is a large amount of money – somewhere in the middle of the average borrowing limit for personal loans – some lenders have strict eligibility requirements for loan applicants. This could mean needing a credit score of 650 or higher, and a DTI at or below 36%.
A savings of $3,300 or so due to a 33 percent down payment is clearly wise. On the flip side, a person with good credit will save far less. That $30,000 loan for a person with good credit might have about $2,344 interest. A down payment of $10,000 will reduce that interest to $1,562.
A $30,000 auto loan balance with an average interest rate of 5.0% paid over a 5 year term will have a monthly payment of $566. In total, the loan will cost $33,968 with $3,968 in interest.
Generally, a good credit score to buy a car falls within the range of 660 to 720 or higher. However, it's important to note that each lender has different criteria, and some may consider lower credit scores as well.
If you have been qualified for a $30,000 car loan, the monthly payment depends on the amount of the down payment, interest rate, and loan length. For example, with a down payment of $2,500, an interest rate of 5%, and a loan length of three years, you will have to pay $824.20/month.
Average Down Payment on a Car with Bad & No Credit
If you want to take out an auto loan with bad credit or no credit, the majority of subprime lenders will require a down payment of 10% or $1,000, whichever is greater.
There's no perfect formula for how much you can afford, but our short answer is that your new-car payment should be no more than 15% of your monthly take-home pay. If you're leasing or buying used, it should be no more than 10%.
The rule recommends making a 20% down payment on the car, taking four years to return the money to the lender, and keeping transportation costs at no more than 10% of your monthly income. As to how exactly it works requires some explanation.
There isn't one specific score that's required to buy a car because lenders have different standards. However, the vast majority of borrowers have scores of 661 or higher.
In other words, a 700 credit score will still qualify you for better deals on credit cards, personal loans, mortgages and other types of credit, but it won't give you access to the same types of terms someone with very good credit, or a credit score above 740, would have.
As a very simple example, borrowing $32,000 for five years at 6% will require a payment of $618.65 per month, with a total interest payment of $5,118.98 over the life of the loan.
Every lender sets its own requirements for zero-down-payment deals, if they offer them at all. Generally, the credit score needed to buy a car is at least 661 whether you make a down payment or not. You could still get a car loan if your score is lower than 661, but be prepared to pay higher interest rates.
NerdWallet recommends spending no more than 10% of your take-home pay on your monthly auto loan payment. So if your after-tax pay each month is $3,000, you could afford a $300 car payment. Check if you can really afford the payment by depositing that amount into a savings account for a few months.
For example, the total interest for a $30,000, 60-month loan at 7% would be $6,497.40. So the monthly payment would be $608.29 ($30,000 + $6,497.40 ÷ 60.
There is no minimum credit score required to buy a car, but most lenders have minimum requirements for financing. Most borrowers need a FICO score of at least 600 to get a competitive rate on an auto loan.
So, if you want a $30,000 car putting down around $3,000 is best. 👍 If you're making $80-$120k then you should aim to put down a 20% down payment. This will help lower your interest and monthly payments.
To qualify for a $30,000 personal loan, you'll likely need a credit score of at least 670. Lenders will also consider other factors in addition to your credit, such as your income, debt-to-income ratio and employment status.
It's good practice to make a down payment of at least 20% on a new car (10% for used). A larger down payment can also help you nab a better interest rate. But how much a down payment should be for a car isn't black and white. If you can't afford 10% or 20%, the best down payment is the one you can afford.
The monthly payment on a $30,000 loan ranges from $410 to $3,014, depending on the APR and how long the loan lasts. For example, if you take out a $30,000 loan for one year with an APR of 36%, your monthly payment will be $3,014.
An increase in your monthly payment will reduce the amount of interest charges you will pay over the repayment period and may even shorten the number of months it will take to pay off the loan.