How Much Should I Put Down on a Car?
The right down payment can save you thousands in interest and keep you from going underwater. Learn exactly how much to put down based on your situation.
Quick Down Payment Recommendations
New Car
Matches first-year depreciation. Keeps you from going underwater on your loan.
Used Car
Used car rates are higher, so more down saves more. Minimum 10% recommended.
Lease
Less is better! Large down payments are lost if the car is totaled.
Why 20% is the Gold Standard
New cars depreciate 15-20% the moment you drive off the lot. A 20% down payment ensures you're never "underwater"—owing more than the car is worth.
Avoid Negative Equity
Never owe more than your car is worth
Lower Interest Rate
Lenders reward lower loan-to-value ratios
Save Thousands
Less principal = less total interest paid
Down Payment Calculator
See how different down payment amounts affect your monthly payment and total interest on a $35,000 car at 7% APR for 60 months.
Loan
$35,000
Monthly
$693
Interest
$6,580
Loan
$31,500
Monthly
$624
Interest
$5,922
Save $658 vs 0% down
Loan
$28,000
Monthly
$554
Interest
$5,264
Save $1,316 vs 0% down
Loan
$24,500
Monthly
$485
Interest
$4,606
Save $1,974 vs 0% down
| Down Payment | Amount | Loan Amount | Monthly Payment | Total Interest | Savings |
|---|---|---|---|---|---|
0% | $0 | $35,000 | $693/mo | $6,580 | — |
10% | $3,500 | $31,500 | $624/mo | $5,922 | Save $658 |
20%Recommended | $7,000 | $28,000 | $554/mo | $5,264 | Save $1,316 |
30% | $10,500 | $24,500 | $485/mo | $4,606 | Save $1,974 |
When Less Down Payment Makes Sense
0% APR Financing Available
If the manufacturer offers 0% APR, putting more down doesn't save you anything on interest. Keep your cash invested elsewhere.
Emergency Fund Priority
Don't drain your savings. Keep 3-6 months of expenses liquid. A smaller down payment is better than no safety net.
Better Investment Returns
If you can earn 8%+ returns elsewhere, a 5% car loan might make sense. Do the math on opportunity cost.
GAP Insurance Coverage
If you have GAP insurance, being underwater is less risky. The insurance covers the difference if the car is totaled.
Down Payment by Credit Score
Your credit score affects both the interest rate you'll get AND how much down payment lenders may require.
Best rates available. Zero-down financing often approved.
Competitive rates. Most financing options available.
Higher rates. Larger down payment reduces total cost.
Limited options. Down payment often required.
Leasing: Different Rules Apply
For leases, conventional wisdom is reversed—put as little down as possible.
Why You Should Never Put a Large Down Payment on a Lease
If your leased car is totaled or stolen in month 2, insurance pays off the lease—but your $5,000 down payment is gone forever. The insurance company doesn't reimburse your down payment.
$0 Down
Maximum protection
$1-2K Down
Acceptable if needed
$3K+ Down
Avoid if possible
GAP insurance is often included in leases
Lower down = more predictable costs
Keep money in your pocket earning interest
Higher monthly payment is worth the protection
Sources of Down Payment
Trade-In Equity
Your current car's value can count as your down payment. Get multiple offers to maximize value.
Estimate trade-in valueManufacturer Rebates
Cash back offers reduce the effective price and can be applied as down payment.
Current rebates guideEmployer Programs
Some companies partner with automakers for employee discounts of $500-$2,000 or more.
Special Discounts
Military, first responder, educator, and college grad discounts typically offer $500-$1,000 off.
Frequently Asked Questions
How much down payment do I need for a new car?
Can I buy a car with no down payment?
How much down payment for a used car?
Should I put a large down payment on a lease?
Does a larger down payment get me a better interest rate?
Ready to Calculate Your Budget?
Use our free calculators to find the perfect down payment and monthly payment for your situation.