If you’re in the market for buying a new or used car, you may wonder how much of a down payment will be required these daysꦍ. Is there a minimum? Will more money down get you a better deal? And ju𝄹st how much will your down payment affect your monthly payments?

How much you’re willing and able to afford as a down payment on a new car is pretty much up to each buyer. But there are som꧑e things you should know about 🅰car down payments before you head to the dealership and fork one over on a car.

How Much Is the Norm?

Car purchases typically don’t have a minimum down-payment requirement, like 20%, although that is a common amount that lenders like to see. Conventional wisdom has typically found that about 20% down is the right amount to help make a dent in the overall amount that you’ll finance. However, in practice, people put down significantly less—around 10%–12%, much lower than the norm. In fact, an Edmunds analysis found most buyers put down only 11.7% as a down payment.

Get a Better Interest Rate 𒊎with a Larger ಞDown Payment

A substantial down payment of 20% or more will accomplish three things for you, notes , CPA, owner of , a study guide comparison tool for 澳洲幸运5开奖号码历史查询:certified public accountants (CPAs):

1. You’ll reduce your monthly payment because you’ll finance less money.
2. You’ll typically get a better 澳洲幸运5开奖号码历史查询:interest rate because, again, you’re financing less, so the lender is taking less risk on you.
3. It will offset the initial 澳洲幸运5开奖号码历史查询:depreciation hit you take as you drive your new car off the lot.

For example, if you were trying to score a deal like 0% financing, typically only offered to those with excellent 澳洲幸运5开奖号码历史查询:credit scores, then you may be able to make a larger down payment to help🐎 you qualify for the 0% deal if you couldn’t qualify without it. The greater the borrower’s participation by putting more money down, the lesꦯs risk there is for the lender—and with lower risk come lower rates.

Get Approved More Easily

Likewise, if you are a risky borrower with a lower credit score, then you may land a better rate if you pay a larger down payment. “So, it is possible that you will get approved more easily or be offered a lower interest rate if you are willing to put a bigger payment down upfront,” says , CFP, RICP, and E.A., ꦚa financial planner and tax preparer at Pocket Project, a finanꦦcial management site.

A scrupulous lender will still factor your credit score into the equation, but think of it as the more you put down, the better your chances of getting approved—and🐟 of qualifying for the best deals.

Lower Your Monthly Payments

What’s more, making a larger down payment will also allow you to have smaller monthly payments, since you’ll finance a smaller 澳洲幸运5开奖号码历史查询:principal amount and pay less interest over the life of the loan—things ꦿthat make a larger down payment a good bet.

Upside-Down Loans

When you drive your new car off the lot, the depreciation timer sta💯rts ticking. The more you owe on the car, the worse it keeps up with its depreciation value.

“The bottom line is that if you put a small amount down, you may end up with negative equity in your vehicle, meaning you will owe more money than it’s actually worth, over time, so investing more upfront definitely does help you avoid being 澳洲幸运5开奖号码历史查询:upside down on your loan,” says Welker.

Is Zero Down a Bad Idea?

In rare cases, it may be fine to put zero down—or if you have no choice because you don’t have the funds to put 澳洲幸运5开奖号码历史查询:anything down. Dealerships certainly know how to bring buyers through the door using a zero-down approach. But the only time you should really take them up on that is if you are buying the car with cash outright and they’re offering 0% financing.

In that case, you could save your cash in an interest-earning 澳洲幸运5开奖号码历史查询:savings option and mak༒e payments on the car, all 💝the while earning interest on your money. But be sure not to touch the money that you saved for the car; otherwise, it won’t make sense to pay off the 0% loan over time.

The Bottom Line

Ultimately, how much down payment you can afford will guide your decision. A great idea is to play with an 澳洲幸运5开奖号码历史查询:auto loan calculator and enter🎃 in various down payment amounts, adjust🦩ing up or down depending on how much you can afford to put down, so you can see how your down payment will affect your monthly payments.

However, putting as much cash down on a car as you can is the secret to getting the best interest rates an🔥d putting yourself in an equity position.