Car Loan Basics:  How Much do You Need for a Down Payment?

If you are interested in buying a new or used car, you may have questions about obtaining a car loan and about other issues relating to buying a car.  In this regard, you may be wondering how much money you will need for a down payment.  Through this brief article, you will be provided some basic information about the car loan financing and about what you will need to have on hand when it comes to a down payment for a new or used car.

Standard Car Loan Financing

While there can be some variation in the amount of a down payment that you will have to put down as part of a car loan and a car purchase, the total cost of the car and your credit history will play roles in determining how much you will need to put down for a down payment on a car.

A 5% down payment is not an uncommon amount for a down payment.  However, and again, there can be some pretty significant variations in the amount of money that will be required for a down payment as part of the loan.

0% Down Options

Because the automobile market has become so competitive in recent times, dealers and lenders oftentimes are offering different incentives in order to attract customers.  In this regard, one of the more common incentives that is being offered with regularity is 0% down car loan financing.  In other words, you can purchase a car and get a car loan without having to make any down payment whatsoever.

Dealer Financing

If you are interested in taking advantage of dealer car loan financing, you very well may end up having to pay a bit more in the way of a down payment.  (Dealer car loan financing is becoming more commonplace in this day and age.  More and more people are using dealer car loan financing today and are likely to do so in the future as well.)  In this regard, while you may pay 5% as a down payment when you are seeking more traditional car loan financing from a bank or savings a loan, you likely will be looking at paying a bit more in the form of a down payment when you seek car loan financing through a dealership.

Of course, and as has been mentioned previously, dealers are also involved in offering incentives.  In this regard, these dealers offer 0% down payment options for the purchase of an auto in many instances.  This type of situation can be very helpful to a person who does not necessarily have the cash on hand to put up for a down payment.   A person can purchase the car he or she needs without having to pull together money for the down payment in advance of making the purchase of a car.