Have you saved enough for your down payment?

By Product Expert | Posted in Finance, Tips and Tricks on Friday, October 23rd, 2020 at 8:23 pm
A stock photo of a couple holding a new set of keys.

How much should a down payment be for a used car? 

Third Coast Auto Group specializes in connecting people with the most reliable vehicle that can fit their budget. Buying a vehicle cannot be a spontaneous purchase. Responsible buyers need to factor in their monthly budget for housing, food and other required expenses, in addition to making sure they can afford their monthly car payments and keep up with maintenance. If you’re currently working through this process, you might also be wondering, ‘How much should a down payment be for a used car?’ After speaking with the financial team at a few Third Coast Auto Group locations and doing a little bit of poking around online, the consensus is that people should put down as much as they can afford. Let’s take a look at some things you should know. 

READ MORE: First-time car-buyer tips 

Do I have to put 20 percent down on a used car? 

Most of the financial experts we looked at suggested that a 20 percent (of the total sale price) down payment is the ideal number to aim for. However, depending on a person’s credit score, a financial institution could work with a down payment as low as 10 percent.  

One of the other major reasons for putting down as much as possible at first is that it can shorten the length of the loan. Owing more on a loan payment than the vehicle is worth is the first step on a slippery slope to bad financial decisions. 

On the subject of less-than-perfect credit scores, just because you’ve gone through a tough financial time does it mean you can’t buy a car, but there will be some additional challenges to overcome. A lower credit score will mean higher interest payments on almost any kind of loan.  

However, you can help yourself from the jump by making as large of a down payment as possible. This is also where having a high-value trade-in will make up some additional ground.

If you have any questions about how to get the best deal possible at Third Coast Auto Group, make an appointment with one of our product experts today.