How much you need for a down payment on a car (2024)

Car prices are still historically high and most people are financing their vehicle with auto loans. At the start of 2024, car payments averaged $735 a month for new vehicles and $523 for used vehicles, according to Experian.

A down payment is a percentage of a vehicle's total cost that you pay upfront. Making a down payment can reduce your interest rate, monthly payments and the duration of your loan.

It'll also start you off with positive equity in your vehicle, which is useful since a car's value can depreciate as much as 20% in its first year.

While your credit score plays a significant role in car loans, experts have traditionally advised that a generous down payment will help get you approved and secure a good rate.

"For a long time, there was a school of thought that recommended a down payment of at least 20% of a new car's purchase price," said Ed McFadden, senior vice president of communications for the American Financial Services Association. "For used cars, the suggested down payment was 10% of the purchase price."

That mindset is changing, especially for new cars: In the first quarter of 2024, the average down payment on a new automobile was just over 14%, according to Edmunds.

"It may be that a car buyer puts down less but has savings, high income and a good credit history," McFadden said.

Capital One offers competitive auto loan rates and superior customer service, ranking highest among mass-market options in J.D. Power's 2023 Consumer Financing Satisfaction Study. Financing is available to borrowers with credit scores as low as 540 and approval can take as little as 24 hours.

For used cars, many borrowers are putting down more than the recommended 10%: The average for the first quarter of 2024 was a little over 16%.

CarMax Auto Financeis one of our top picks for financing a used car, with an easy application process, a large inventory of vehicles and no minimum credit score requirement to qualify. If you find a better rate within three days of closing your CarMax loan, you canreplace your financing at no cost.

There's no one-size-fits-all answer when it comes to how much of a down payment will get the best rate on your loan.

"Every creditor has proprietary modeling they use for pricing credit and there can be a number of factors," McFadden said. "So there's no universal formula."

Still, the more you can put down, the better. The bigger the down payment, the less money you have to borrow and the less interest you'll have to pay.

It's possible to get a car loan with no money down, but it might not have the best terms.

"Your monthly payment would be significantly higher and, since it would have higher risk, it would likely mean a higher interest rate, as well," said Mark Schirmer, director of industry insights and corporate communications at Cox Automotive.

In some cases, a dealership may offer a no-interest loan with no money down to a particularly desirable buyer.

"Perhaps when car sales are slow — think the economic collapse in 2009 — or conversely, when there is a great deal of competition to sell a particular type of vehicle, you may see a 0% APR advertisem*nt for consumers who have good credit," McFadden said.

In those cases, the manufacturer is typically paying the interest to get the vehicle sold. That could save you thousands in interest but your monthly payment will still be higher than if you'd made a down payment.

Another option is the Wells Fargo Active Cash® Card, which has a 0% intro APR for 15 months from account opening on purchases and qualifying balance transfers. (After that, it's a variable APR of 20.24%, 25.24% or 29.99%). New cardholders pay anintroductory balance transfer feeof3% for 120 days from account opening,then up to 5% on futurebalance transfers

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