How much should you put down on a car?

One rule of thumb for a down payment on a car is at least 20% of the car's price for new cars and 10% for used — and more if you can afford it. These common recommendations have to do with the car's depreciation and how car loans work. Ultimately, the right down payment on a car for you depends on your financial circumstances and priorities.

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Does my loan affect how much I should put down on a car?

It can. Putting more than 20% down can save you money in the long run, even if the purchase price is the same. Auto loans carry interest, meaning you'll pay back more money over time than you initially borrowed. Putting down more money on the car will save you some amount of interest.

If you're lucky enough to catch a dealer promotion with 0% interest financing, you might decide to make a smaller down payment on a car. Still, you might want to consider paying 20% to keep from owing more than the car is worth after a year or two. Your down payment can also affect your loan. If your credit isn't great, making a sizable down payment can be the difference between getting a loan approval or not. Whatever your credit score, a larger down payment on a car can result in more favorable terms — like a lower interest rate — that could save you money in the long run.

Pro tip:

Use our car loan calculator to see how different down payments and interest rates stack up. See how much you'd pay in interest over the life of the loan and how a cash rebate can impact your monthly payment.

Are there any downsides to putting more than 20% down on a car?

Not usually. It means less money in your pocket upfront, of course, but it will save you money in the long run. Borrowing less and putting more down on a car builds equity sooner, incurs less interest, and results in lower monthly payments.

One possible exception to the recommended down payment on a car is if you're able to buy the car outright with cash, but you have poor or little to no credit. Getting a loan and setting money aside to make payments can help you build or repair your credit. If you're unsure what the best approach is, speak with a financial advisor.

Just purchased a new car? Insure it with Progressive. You can get a car insurance quote online or call 1-866-749-7436 to customize your coverages.

What if I can't afford the typical down payment on a car?

It depends. If you need a car immediately, you might have to settle for a lower down payment, knowing that you'll get the car you want but pay more in the long run. If the situation isn't urgent, consider waiting for the right time to buy and save for a bigger down payment. Learn more about the best time to buy a new car.

Does how much I put down on a car affect insurance?

Not directly. Your car insurance rates are based on factors like your age, location, and the make and model of your car. But you might consider either gap insurance or loan/lease payoff coverage from Progressive when you buy the car, especially if your down payment is low. These optional coverages can help pay off your remaining loan balance if your car is totaled or stolen. That can be reassuring when you make a low down payment and start with a bigger gap between what you owe and the value of the car.

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