What is the amount required for a car down payment?

Experian reported that in the beginning of 2024, the average monthly car payment for new vehicles was $735, while for used vehicles it was $523. Despite historically high car prices, most individuals are still financing their vehicles through auto loans.

Paying a portion of a car's price upfront can lower your interest rate, monthly installments, and the length of your loan.

Starting off with positive equity in your vehicle is beneficial since a car's value can depreciate as much as 20% in its first year.

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What's a good down payment on a car?

Experts have traditionally advised that a generous down payment can help you get approved for car loans and secure a good rate, despite the significance of your credit score.

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

The average down payment on a new car in the first quarter of 2024 was just over 14%, according to Edmunds.

McFadden stated that a car buyer might have lower down payments but still possess savings, high income, and a good credit history.

Capital One provides competitive auto loan rates and exceptional customer service, earning the top spot among mass-market options in J.D. Power's 2023 Consumer Financing Satisfaction Study. Financing is accessible to borrowers with credit scores as low as 540 and approval can be obtained in as little as 24 hours.

In the first quarter of 2024, the average down payment for used cars was slightly above the recommended 10%, with many borrowers putting down more than this amount.

CarMax Auto Finance is 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. Additionally, if you find a better rate within three days of closing your CarMax loan, you can replace your financing at no cost.

The benefits of a bigger down payment

The best loan rate cannot be determined by a fixed down payment amount.

"McFadden stated that each creditor employs unique modeling techniques for determining credit pricing, and several factors can influence these calculations. As a result, there isn't a single formula that applies universally."

A larger down payment means you'll need to borrow less money and pay less interest.

Can you get a car with no down payment?

Obtaining a car loan without a down payment is possible, but it may come with unfavorable conditions.

Mark Schirmer, director of industry insights and corporate communications at Cox Automotive, stated that your monthly payment would be higher due to the increased risk, which would also result in a higher interest rate.

A dealership may provide a no-interest loan with no money down to a highly sought-after customer.

When car sales are slow, such as during the economic collapse in 2009, or when there is intense competition to sell a specific type of vehicle, you may see a 0% APR advertisement for consumers with good credit, according to McFadden.

If you don't make a down payment, the manufacturer may pay the interest to sell the vehicle, which could save you thousands in interest, but your monthly payment will still be higher.

Can you make a down payment with a credit card?

While many car dealerships accept credit cards for down payments, it's important to note that interest rates for credit cards are typically higher than for auto loans. As such, it's best to pay off the balance before the due date to avoid high interest charges. Additionally, dealerships may have a maximum amount they'll accept on a card and may charge a convenience fee.

If you want to take advantage of a substantial welcome bonus, the Capital One Venture X Rewards card offers 75,000 miles when you spend $4,000 on purchases in the first three months of opening. Additionally, the card earns 2x miles on all non-bonus purchases. However, it's important to consider the $395 annual fee when deciding if using the card to make a down payment is the best option for you.

The Wells Fargo Active Cash® Card offers a 0% intro APR for 15 months on purchases and qualifying balance transfers, followed by a variable APR of 20.24%, 25.24%, or 29.99%. New cardholders pay an introductory balance transfer fee of 3% for 120 days from account opening, then up to 5% on future balance transfers.

Meet our experts

We interviewed Ed McFadden, senior vice president of communications for the American Financial Services Association, and Mark Schirmer, director of industry insights and corporate communications at Cox Automotive, for this story.

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