Experts recommend paying at least 20% of the total cost of the car as a down payment. However, if you don't have the extra funds, paying in the 10-12% range might be a better choice. The amount you decide to put down should consider your current financial situation, savings, and future financial plans.
In general, you should strive to make a down payment of at least 20% of a new car's purchase price. For used cars, try for at least 10% down. If you can't afford the recommended amount, put down as much as you can without draining your savings or emergency funds.
Typical Down Payment: Many people put down between 10% to 20% of the vehicle's price. For a $30000 car, this would be between $3000 and $6000.
Yes, you can make a 50% down payment on a car. In fact, a larger down payment can have several benefits, such as reducing the amount you need to finance, lowering your monthly payments, and potentially securing better financing terms or interest rates.
Disadvantages of a Larger Down Payment
The two biggest cons of making a down payment that's around 50 percent are: More money down doesn't lower your interest rate – Bad credit car buyers get higher than average interest rates, and it's extremely rare that a larger down payment can lower it.
Most subprime lenders – banks and other institutions that give loans to people with bad credit or no credit – usually require a down payment of 10% on a loan, or $1,000, whichever is greater. This is the minimum you can expect to pay for the vehicle of your choice. If it is possible, try to make a bigger down payment.
Example: A six year fixed-rate loan for a $25,000 new car, with 20% down, requires a $20,000 loan. Based on a simple interest rate of 3.4% and a loan fee of $200, this loan would have 72 monthly payments of $310.54 each and an annual percentage rate (APR) of 3.74%.
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.
How much should you put down on a car? A down payment between 10 to 20 percent of the vehicle price is the general recommendation.
Payment Amount
For example, for a car price of $20,000, a down payment of $4,000, a loan amount of $16,000, a loan term of 48 months, an annual interest rate of 5%, and a start-of-period payment method, your payment amount would be $366.94. You would be paying this amount each month for your auto loan.
Down payments are often required on auto loans, especially with less-than-perfect credit. If you apply for a car loan from a subprime lender signed up with a special finance dealership, you can expect to need an average down payment on a car of at least $1,000 or 10% of the vehicle's selling price.
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.
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.
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.
It's total loan amount (including interest) divided by the loan term (number of months you have to repay the loan. 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 = $552.50).
When you apply for a car loan, the lender's hard inquiry into your credit could temporarily ding your credit score by a few points. However, its effect is usually short-lived, and you may strengthen your credit in the long run by making timely payments.
In 2024, a good credit score to buy a car typically falls within the range of 700 to 749.
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.
Another option may be to get a family member or friend with a strong credit score to cosign the loan. If you have poor credit, having a cosigner can help you get a car with no down payment and with potentially lower interest rates.
CarMax is a strong option for buyers looking for flexible financing with no minimum credit score requirement and a straightforward online process. Its starting APR of 5.75% and loan terms of 24–72 months are competitive.