Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and heres how we make money.
Generally speaking, you ought to endeavor to provide a down payment of at least 2020% of the price of a new car purchase. For used cars, try for at least 10% down.
If the suggested amount is out of your price range, contribute as much as you can without depleting your emergency or savings accounts. When you drive away with a car, your financial situation will be better the more down payment you are able to make.
Some people just lack the funds saved to make the required down payment, particularly in light of the rising cost of cars. Early in 2020, the average cost of a new car was $47,000, which meant that a down payment of $9,400 would be required. For used cars, the average price surpassed $25,000, so 10% down would be $2,500. These down payment amounts can include cash, the value of a trade-in or both.
Due to their low risk for a lender as indicated by their debt-to-income ratio, credit scores, and past auto loan history, other borrowers can put down little to nothing on the car.
Compare rates from up to four lenders to find the best deal possible—free of fees, markups, or commitments.
So, you’ve set your sights on a sweet $15,000 car. Congratulations! However, before you start planning your next vacation in your new car, there’s one important question you must address: how much should you put down?
Don’t worry, we’ve got your back. This guide will break down everything you need to know about down payments, helping you figure out the perfect amount to put down on your $15,000 dream machine.
The Down Payment Lowdown: 10-20% is the Sweet Spot
The general rule of thumb is to aim for a down payment between 10% and 20% of the car’s price. In your case that means putting down anywhere from $1,500 to $3,000.
Why is this the sweet spot? Well, it’s all about striking a balance between several factors:
- Lowering your loan amount: A bigger down payment means you’ll borrow less money, which translates to lower monthly payments and less interest paid over the life of the loan.
- Boosting your approval odds: A larger down payment shows lenders you’re serious about your purchase and lowers their risk, making you a more attractive borrower.
- Building equity faster: The more you put down upfront, the faster you’ll build equity in your car, which means you’ll owe less than the car’s value as you pay it off.
But What If You Can’t Afford That Much?
Life throws curveballs, and occasionally it’s not feasible to come up with a 2010–20% down payment. Don’t fret! There are still options:
- Smaller down payment: You can still get a loan with a smaller down payment, but be prepared for higher monthly payments and interest charges. Aim for at least 5% to show some skin in the game.
- Trade-in your old car: If you have a car to trade-in, its value can be used towards your down payment, reducing the amount you need to come up with out of pocket.
- Consider a co-signer: If your credit score isn’t stellar, having a co-signer with good credit can help you qualify for a better loan and potentially lower interest rates.
Remember, the ideal down payment amount depends on your individual circumstances. Consider your budget, credit score, and financial goals before making a decision.
Beyond the Down Payment: Other Factors to Consider
Although the down payment is important, there are other factors that also impact your auto loan. Here are some other things to keep in mind:
- Interest rates: Shop around for the best interest rate you can get. A lower interest rate means you’ll pay less in the long run.
- Loan term: The length of your loan term will impact your monthly payments. A shorter term means higher payments but less interest paid overall.
- Additional fees: Be aware of any additional fees associated with the loan, such as origination fees or prepayment penalties.
The Bottom Line: Be Smart and Strategic
Buying a car is a big decision, so it’s important to be smart and strategic about your down payment. By understanding the factors involved and doing your research, you can make an informed decision that fits your budget and financial goals.
Bonus Tip: Use online car loan calculators to estimate your monthly payments and see how different down payment amounts affect your loan. This can help you visualize the impact of your decision and make the best choice for your situation.
Now go forth and conquer the car-buying world! Remember, knowledge is power, and with this guide in your arsenal, you’re well-equipped to make a smart down payment and drive away in your dream car with confidence.
Lower your loan-to-value ratio
Car loans are backed by the value of the vehicle, and lenders set limits on the amount a borrower can borrow based on that value. This is known as the loan-to-value ratio, or LTV. Each lender has its own LTV guidelines for loan approval; in certain circumstances, a higher down payment may enable you to meet the lender’s minimum LTV ratio requirement.
Also, lenders use the LTV ratio as a measure of a loan’s risk. It lowers the possibility that the lender will lose money if you default on the loan when you borrow less than the car’s value. Loans considered to be lower risk tend to come with lower interest rates.
Why your car down payment amount matters
Typically, the more you put down, the lower your interest rate will be. Putting down a sizeable amount and financing a smaller portion of the purchase price indicates to lenders that you are a less risky borrower. Additionally, you can probably choose a shorter term and pay less interest over the course of the loan if you have a smaller loan amount.
How Much Car Can You Really Afford? (Car Loan Basics)
FAQ
What would a car payment be for $15000?
|
Loan Amount
|
Loan Term (Years)
|
Estimated Fixed Monthly Payment*
|
|
$10,000
|
5
|
$207.54
|
|
$15,000
|
3
|
$463.09
|
|
$15,000
|
5
|
$311.30
|
|
$20,000
|
3
|
$617.45
|
How much should I put down on a 15000 car with bad credit?
How much is the monthly payment on a 15k loan?
How much should I put down on a $12000 car?
How much should you put down on a car?
A down payment between 10 to 20 percent of the vehicle price is the general recommendation. But if you can afford a larger down payment, you can save even more money on interest payments over the life of the loan.
How much down payment do I need for a car loan?
Consider creating a budget with that 10 to 20 percent number in mind before setting your sights on a vehicle loan. Use Bankrate’s auto down payment calculator to find out your down payment on any car purchase.
Should you buy a car with a 20% down payment?
Many people do buy cars with lower down payments. Some simply don’t have enough money saved to put down the recommended amount, especially as car prices have skyrocketed. In 2021, the average price of a new car was approaching $42,000, meaning a 20% down payment would be $8,400.
How much is the average down payment on a new car?
In the second quarter of 2023, the average down payment on a new vehicle was nearly $7,000, according to Edmunds. The average down payment on used vehicles was lower at $4,107 during the same period. Still, this figure is 12 percent higher than it was a year ago. Given current market conditions, elevated down payments aren’t surprising.