Auto Loans

How Much Should You Have for a Car Down Payment?

“No money down!” These words are nearly impossible to ignore when you're shopping for a car. What could be sweeter than not making a down payment? Believe it or not, paying 20% upfront.

Here are a few good reasons to put down 20% on a car:

You might receive a lower interest rate

Making a sizable down payment means you're borrowing less. It also signals to lenders that you're a saver and probably a lower risk as a borrower. That means lenders are more likely to offer you a lower interest rate.

Financial Steps to Take Before Buying a Car

Think about the effort it takes to search for the right new car and to negotiate the lowest price.

Unless you plan to pay cash in full, the third leg of the stool is finding the best possible financing. Because loans typically come in 12-month increments, we're talking about a decision that will affect your household budget a minimum of two years and probably more like five or six.

Here are a few things to consider while looking for the best financing option: