What is a good down payment on a car?
A good down payment on a car is generally considered to be 20% or more of the vehicle's total purchase price for a new car, and at least 10% for a used car. Making a substantial down payment reduces the overall loan principal, lowers monthly financing payments, and decreases the likelihood of becoming "upside down" or owing more on the auto loan than the vehicle is worth due to rapid depreciation. Furthermore, putting down a larger cash amount improves your loan-to-value ratio, which helps borrowers secure significantly more favorable annual percentage rates from lenders, saving hundreds or even thousands of dollars in total interest charges over the life of the financing contract.
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