Down Payment Impact Tool Calculator
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Frequently Asked Questions
How much should I put down on a car?
Financial experts recommend a down payment of 10-20% of the vehicle price. This reduces your loan amount, lowers monthly payments, saves on interest, improves loan-to-value ratios for better rates, and reduces the risk of negative equity. A minimum of 10% is ideal, with 20% being optimal.
Does a larger down payment always save money?
Yes, a larger down payment always saves money on interest and reduces monthly payments. However, consider opportunity cost - if your money could earn more in investments than the loan interest rate, you might be better off with a smaller down payment and investing the difference.
Can I get a car loan with no down payment?
Yes, many lenders offer zero-down loans, especially on new vehicles. However, zero-down loans typically have higher interest rates, larger monthly payments, and higher total costs. You're also more likely to be upside-down on the loan (owe more than it's worth).
How does down payment affect my interest rate?
Larger down payments improve your loan-to-value (LTV) ratio, which can qualify you for better interest rates. Lenders view lower LTV as less risky. Typically, down payments of 10-20% may reduce rates by 0.5-1.5% compared to zero-down loans.
