How much is the average down payment on a vehicle? Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive financial calculators and tools as well as publishing unique and impartial content, by enabling you to conduct research and analyze data for no cost and help you make sound financial decisions. Bankrate has partnerships with issuers such as, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The deals that are displayed on this website are provided by companies who pay us. This compensation can affect the way and when products are featured on this site, including, for example, the sequence in which they appear in the listing categories, except where prohibited by law for our mortgage, home equity and other home loan products. This compensation, however, does have no impact on the content we publish or the reviews that you read on this site. We do not contain the universe of companies or financial deals that could be open to you. EXTREME-PHOTOGRAPHER/Getty Images

3 minutes read. Published October 20 in 2022.

Written by Allison Martin Allison Martin Written by Allison Martin’s career began more than 10 years ago as a digital content strategist, and she’s since published in numerous prestigious financial publications, including The Wall Street Journal, MSN Money, MoneyTalksNews , Investopedia, Experian and Edited by Rhys Subitch The editor is Auto loans Editor Rhys has been editing and writing for Bankrate since late 2021. They are committed to helping readers to control their finances with clear, well-researched information that breaks down otherwise complicated topics into bite-sized pieces. The Bankrate promises

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This compensation could affect the way, location and in what order items appear within listing categories and categories, unless it is prohibited by law. We also offer loan products, such as mortgages and home equity, and other products for home loans. Other factors, such as our own rules for our website and whether the product is offered in the area you reside in or is within your self-selected credit score range may also influence the manner in which products appear on this site. We strive to provide an array of offers, Bankrate does not include specific information on each credit or financial products or services. New and used car prices have shot up, forcing customers to settle for greater monthly installments. A lot of people are digging to their bank accounts to make . But exactly how much money do you have to put down to secure an ? Many financial experts suggest 10 to 20 percent. However, it’s vital to evaluate your financial situation and determine a figure that works for your budget. Average vehicle loan cost in the beginning of 2022 the median down payment for the purchase of a brand new car was $ , in accordance with Edmunds. This is a significant increase of 27 percent from just a year ago and is the highest it has ever been. The average down payment for used vehicles was less at $3,574 during the same period. Still, this figure is 7 percent higher than what it was one year ago. Given current market conditions rising down payments shouldn’t come as surprising. New and used vehicle prices also hit record highs in the first quarter of 2022. Average car loan amounts were $30,830 and $39,340 for new and used cars, respectively, compared between $35,040 and $23,958 during the fourth quarter of 2021. What should a car down payment be? Experts in finance recommend a down payment of at minimum 20 percent when financing the purchase of a . This amount is a bit too high for some, particularly when coupled with the recent spike in used and new car prices. For example the 20 percent down payment on an automobile worth $35,000 is $7000. However, there are advantages to putting such a large sum down. You can increase your chances of approval and be eligible for higher interest rates. Plus, your monthly payments will be less, as well as you’ll be paying less in interest over the life of the loan. In the event that you’ve got a hefty amount of savings, placing this amount down may not be an issue. If not, it’s probably not worth empting your savings account in order to make an investment. It is also possible to get closer to the suggested 20% down payment. If not, you should aim for 10 percent as this amount is still acceptable to most lenders. Make sure to only pay what you can comfortably afford. Do I have the ability to buy a vehicle without a down amount? Certain dealers will let you qualify for financing with little to none of a downpayment, depending on your credit history- but these loans typically carry higher cost of. If you’re fortunate enough to be able to get the loan without having to put money down this might not be an unwise choice. You can invest the money to increase your wealth instead of using it to pay for an initial down payment. These loans generally require excellent credit. However, there’s a major chance to consider. If your car is totaled and you don’t have the funds, you might have to pay that gap between the amount the insurance company is willing to pay your lender as well as what you have to pay. How do you determine a downpayment Bankrate’s estimates can help you determine potential cost savings by putting cash down or trading your vehicle. It’s necessary to know the purchase price, loan term, interest rate, tax rates (federal as well as state) and the minimum and maximum amount of your down payment to get started. As an example, let’s say you’re approved for a 4 year, $25,000 auto loan with a rate of 6 percent. You you can put at least $2,500 (or 10-percent) as well as $4000 (or sixteen percent) down. Here’s how you’d use the calculator Step 1: Type in $4,000 and $2,500 in the minimum and maximum down payment boxes. Step 2: Enter an amount of purchase of $25,000, the loan period of 48 months and the 6-percent interest in the boxes labeled. Step 3: Input the amount you think you could earn from the down payment if you invested it instead. In this case, you can use 3 percent. Step 4: Enter the state and federal tax rate. Use 7 percent for this example. Based on these numbers the monthly installment with a $2,500 down payment will be $528.41, compared to $493.41 with the $4,000 down payment. With a higher down payment, you’d save $109.86 per month or $3,773.28 over the course of your loan. What makes a downpayment essential Besides significant cost savings and lower monthly payments here are a few additional reasons to consider you should consider a down payment: Better loan terms: A higher down payment amount can potentially get you a loan , typically as lower interest rates. A higher equity level: You’ll begin having equity within your car when you make a down payment, which means you’ll owe less than the vehicle is worth. This protects you from being required to pay for the extra amount if you choose to sell your vehicle and trade in the vehicle shortly after taking out the loan. Next steps Even though the typical automobile loan down payment is rising but you’re not completely out of luck if you don’t have much cash. Try to make a down payment that is at least 10 percent, or work with an lender willing to accept lesser if you do not have the money. Bring something to the table. Even a modest down payment may help you secure an auto loan with fair terms and lessen the risk of having to repay more than your car is worth in the early loan term. Utilize our down payment calculator prior to going car shopping to identify the price points that are compatible with the amount you want to put down. Find out more


Allison Martin’s work began over 10 years ago as a digital content strategist, and she’s since been published in a variety of top financial publications, including The Wall Street Journal, MSN Money, MoneyTalksNews , Investopedia, Experian and Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since late 2021. They are committed to helping readers gain the confidence to manage their finances with clear, well-researched details that cut otherwise complex topics into manageable bites.

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