With today's rising car prices, some of the most desirable vehicle models are hitting the $30,000 range, and it's easy to wonder just how much you should be putting down when financing a car. Here's a look at down payment examples for cars priced at around $30,000 and why you may want to start saving now.
What's the right down payment? If you're a borrower with bad credit – a credit score of 670 or below – you're typically required to make a down payment of at least $1,000 or 10% of a vehicle's selling price when you take out an auto loan. However, this varies by lender, and the larger the down payment you can make, the better.
As a general rule of thumb, it's recommended that you put down at least 20% on a new vehicle, and at least 10% on a used car. Depending on the car's selling price, this could mean shelling out quite a bit of cash.
Down payment examples for new cars. When it comes to new cars, it's typically easier to qualify for a car loan with a higher credit score. Higher scores may mean fewer stipulations on the amount of your down payment, so we recommend putting down at least 20%.
Here's what these amounts look like:
- 2022 Subaru Outback, MSRP $28,320
20% down payment: $5,664
10% down payment: $2,832 - 2022 Toyota RAV4, MSRP $30,290
20% down payment: $6,058
10% down payment: $3,029 - 2022 Chevy Silverado 1500, MSRP $34,195
20% down payment: $6,839
10% down payment: $3,420
Down payment examples for used cars. If you don't have good credit, it's not impossible to qualify for a new car but a used vehicle may be easier to get approved for. However, you may be required to may a different down payment, maybe more than the recommended 10% minimum down.
- 2019 Buick Envision: Listing Price $29,155
10% down payment:$2,916 - 2021 Jeep Cherokee: Listing Price $30,990
10% down payment: $3,099
Why does a down payment matter? Having a down payment can be a big plus when you're financing a vehicle – the more you put down, the less you finance. And borrowing less can be one of the keys to getting the loan you need, especially if you're struggling with poor credit.
Even if you're not required to make a down payment, it does a lot of good for you as a borrower. With a smaller loan, you may have a wider choice of loan terms, and it can save money in interest charges as well. Down payments can also help keep your vehicle from getting into or from staying in negative equity.
Since you have the potential to need a large down payment on a more expensive car, it's a good idea to start saving as soon as possible. It's also a good idea to keep a separate emergency fund, so you don't deplete your savings just for a car. On this front, it's also good to know that a down payment doesn't have to be paid strictly in cash.
You can also you the value of a trade-in, or the combination of both cash and trade to cover a down payment amount.
