How Much Should Your Car Down Payment Be?

Posted: Tuesday, October 1st, 2019

If you’re searching for a new or used car in the St. Louis area, there are a few things you’re probably thinking about, and one of those is likely the vehicle down payment. You may also be wondering how much a down payment for a car with bad credit costs. Traditional wisdom says you should pay 20 percent of the car’s value up front, but is that always the case? At Green Light Auto Credit, we offer auto loan services and information, and our expert financing team can help you figure out how much you should pay up front.

What Kind of Car Are You Buying?

One important factor in figuring out what your down payment should be is the kind of car you’re buying. If you’re purchasing a new vehicle, paying 20 percent will help offset any loss if the vehicle is stolen or totaled within the first few months. If that’s not an option, GAP (guaranteed auto protection) or new car replacement insurance can help address that risk. With a used vehicle, you don’t have to worry as much about the initial depreciation, so it’s more common to pay around 10 percent.

new car buyers

Pay As Much As You Can Afford

No matter what type of car, truck, or SUV you purchase, you’ll want to pay the biggest down payment you can afford. It’s simple: More money up front saves you money in the long run. If you have excellent credit, you might be eligible for a zero-down offer, but while that might be tempting, it will cost you more in interest. In addition, a loan with a shorter term will also save you money over a long-term loan.

How Much Down Payment for a Car with Bad Credit?

The average down payment on car with no credit or bad credit is usually a minimum of 10 percent or $1,000 (whichever is higher). So, in this case, you’ll make a $1,000 down payment on a vehicle that costs $5,000, because it’s higher than 10 percent of the purchase price. If you’re attempting to get a high-risk loan, you may be required to pay more — probably closer to 20 percent. Buying a car with bad credit but large down payment won’t necessarily offset your bad credit score, but it can help, especially if you’re able to put down more than the minimum required amount. While your down payment will not affect your total sales tax, it will help save you money.

Trade-In Your Car to Make a Down Payment More Affordable

Many drivers already have the means to make a sizable down payment — their old vehicles. Trading in your vehicle for cash can alleviate the financial stress of gathering that 10 percent or $1,000 (or more in some cases). Not only does this help you purchase the vehicle you want, but it also remove the hassle of selling the car yourself. Instead of finding a car buyer in the St. Louis area yourself, the dealership will simply take the car of your hands, give you the cash, and resell it on their lot.

Get More Car Financing Tips from Green Light Auto Credit!

How much a down payment for a car with bad credit, no credit, or good credit costs depends on the individual customer, and that’s where Green Light Auto Credit comes in. Our financing team works with a nationwide network of lenders to get you the best deal, and we’re happy to help customers with bad or no credit. To find out more about our financing services for customers in the Florissant area, contact us today with any questions you might have.

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