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How Much Should a Car Down Payment Be?

Edmunds.comEdmunds.com Member, Administrator, Moderator Posts: 10,315
edited December 2014 in General
imageHow Much Should a Car Down Payment Be?

The recommended down payment for a car has long been 20 percent. But an 11 percent down payment is now the national average. Here are the downsides to a lower down payment.

Read the full story here


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    qbrozenqbrozen Member Posts: 33,026
    Gap insurance. Its cheap. Maxing out the loan amount on a super low interest loan and taking gap insurance is the way I go. The couple hundred bucks for the insurance is nothing compared to what you stand to lose if, using the author's argument, you put down 20% and total the car in the first year.

    '11 GMC Sierra 1500; '08 Charger R/T Daytona; '67 Coronet R/T; '13 Fiat 500c; '20 S90 T6; '22 MB Sprinter 2500 4x4 diesel; '97 Suzuki R Wagon; '96 Opel Astra; '08 Maser QP; '11 Mini Cooper S

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    ken117ken117 Member Posts: 249
    In the age of low or no interest rates, the down payment has little impact.

    Say I purchase a car for $30,000 and I put down 20 percent. I drive out the door and the car is totalled. The insurance company pays me $24,000. The car cost me $6,000. On the other hand, I put no money down, I drive off the lot and the car is totalled. The insurance company pays me $24,000. I need to then pay $6,000 to make up the difference. Once again the car cost me $6,000, No difference.

    However, if I put no money down, I have $6,000 in the bank which I would not have if I had put the money down on the car. Ready cash can be useful.

    Of course, a way around is to pay a bit for GAP insurance, say $200. I again buy the $30,000 car and put nothing down. I drive out off the lot and the car is totalled. Insurance once again pays $24,000 but this time the GAP coverage pays the $6,000. I am out of pocket the $200.

    Wether one puts money down or does not put money down, the cost of the vehicle is the same. If possible, it is often best not to put any money down.
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    thrstonlovi1thrstonlovi1 Member Posts: 6
    If your credit score is below 720 and you don't have at least 10% down (trade excluded), forget about even buying. Salespeople and [non-permissible content removed] F & I guys will not even talk to you.
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    connerbaileyconnerbailey Member Posts: 1
    Sometimes, some might see ads on television or ads in the paper or online for zero percent APR car loans, such as Toyota zero percent financing being offered today on Television. Be mindful, though, as zero percent financing is not always the offer one thinks it is. Know when to buy new car for you.
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    4classicart4classicart Member Posts: 1
    I have 4K to put down on a 12K car. Should I split my down payment to 2K then 2K with my first month payment and still continue to make monthly payment?
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    nanajephnanajeph Member Posts: 1
    I purchased my truck for 19k and made 5k down payment.I have so far made 17 consistent payment but when I called the finance company they argued that I have only made 14 payments but my bank statement says something different which is 17payment and even on my account on their website indicates I made 17 payments for $412 per month yet I still owe 14k doesn't make sense to me so I may seek a professional help to have this explained to me and I find out am screwed by the finance company hell is going break loose for big legal battle.Can somebody explains to me why I owe that much after my down payment of 5k at when I purchased the car and been making payment often.
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    steverstever Guest Posts: 52,454
    edited March 2015
    Bankrate.com's auto loan calculator has an amortization schedule you can use to keep a running track of what your payoff is. If your numbers on the schedule don't jibe with the finance company, then someone needs to work the numbers. Your local consumer protection agency may be able to help in that case.
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    MichaellMichaell Moderator Posts: 243,083
    nanajeph said:

    I purchased my truck for 19k and made 5k down payment.I have so far made 17 consistent payment but when I called the finance company they argued that I have only made 14 payments but my bank statement says something different which is 17payment and even on my account on their website indicates I made 17 payments for $412 per month yet I still owe 14k doesn't make sense to me so I may seek a professional help to have this explained to me and I find out am screwed by the finance company hell is going break loose for big legal battle.Can somebody explains to me why I owe that much after my down payment of 5k at when I purchased the car and been making payment often.

    Can you share with us who the bank is?

    I know for most auto loans the majority of the early payments address the interest ... not much is used to reduce the principal. As noted by my co-host above, there are plenty of tools available to help you chart the amortization schedule.

    If the beginning balance of the loan was $14K ($19K purchase price - $5K down payment), 17 payments should result in a current balance of less than $14K.

    The other possibility is that the $19K was only the purchase price, and there were other taxes and fees added on before the down payment was applied. You should review your paperwork to see if this was the case.

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