The amount you need for a down payment on your next car largely depends on two things: the vehicle's selling price and your credit. Let's take a closer look at why these things can impact what you need for a down payment on a car.

Saving for a Down Payment Based on Selling Price

How Much Should I Save for a Down Payment on a Car?When buying a vehicle, a good rule of thumb for a down payment has always been between 10 and 20 percent of the car's selling price. Therefore, the amount you may want to put down can vary widely depending on the price of the vehicle you're financing.

If you have less than perfect credit, we recommend that you make as large of a down payment as you can. Investing more of your own money shows lenders you're willing to have some "skin in the game," and it also saves you money over the loan term.

For example, let's say you're planning to finance a $15,000 car for 60 months and you got an interest rate of seven percent. Here's how different down payment amounts would affect the overall cost of your loan:

  Down Payment 

  Amount Financed 

  Monthly Payment 

  Total Interest Paid 





$1,500 (10%)




$3,000 (20%)




As you can see, putting 10 percent down up front saves you $282 in interest charges over the loan term, while a 20-percent down payment leads to paying $564 less in interest charges compared to not putting any money down.

Saving for a Down Payment Based on Your Credit

Your credit comes into play when you're determining how much money you should save for a down payment because lenders have different down payment requirements. If you have excellent credit and are financing through a traditional lender, you may not need to put a large amount of money down, or any at all, depending on the cost of the vehicle.

If you're suffering with poor credit, however, you're most likely going to have to go through a special finance dealer with subprime lenders available. These lenders help people in tough credit situations, but they usually require a down payment. The down payment requirement through most subprime lenders is typically $1,000 or 10 percent of the car's selling price, whichever is less.

Do I Have to Pay the Down Payment in Cash?

One of the good things about making a down payment is that it can be paid in more ways than one, which means you may not have to take the time save up what you need in cash. There may be two options you can use for your down payment, at least partially.

Typically, you can use trade-in equity, cash, or a combination of the two. In some cases, you might even be able to put a part of your down payment on a credit card, but this depends on the lender. Be careful doing this, however, because it can end up costing you more in interest charges than it's worth.

Getting the Car Loan You Need

If you're ready to get your next auto loan, but don't know where to turn due to bad credit, let Drivers Lane help. We take the anxiety out of finding financing by getting you connected to a special finance dealership that has the lending resources you need to get back on the road. Fill out our easy car loan request form to get the process started right now!