For a long time, paying a 20% down payment for a new car was the golden rule, but this isn't realistic for every buyer, especially in the current climate. Cars are more expensive than ever, and most buyers' incomes haven't changed to match, so it's harder to make sizable down payments. So how much should you be putting down on your new or used car?
Our best advice is for you to pay what you can afford. Today, that means about an average of 12% of the vehicle's total cost, but if you can't afford 12%, don't sweat it. Payments only go down about $20 for every $1,000 you put down, so you won't save yourself that much in monthly payments. Many new cars have extremely low APRs, so you don't have to worry about paying off excessive interest rates. That being said, we recommend higher down payments since they save you money in the long run.