What Are Acceptable Forms of Down Payment for a Car?
Cash, checks, debit cards, credit cards, and trade-ins are acceptable forms of down payment for a car.
Written by Jessica Gibson
Reviewed by Jessica Barrett
Cash, checks, debit cards, credit cards, and trade-ins are acceptable forms of down payment for a car. Most dealerships are happy to find a down payment option that works for you and your budget.
You’ve selected the car you want to buy, and now it’s time to talk about financing. A down payment improves your chances of getting approval from a lender. Cash, checks, and debit cards are typically preferred. But if you don’t have the money on hand to make a down payment, some lenders will also take credit cards or let you trade in a vehicle.
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Acceptable forms of down payment
Before you head to the car dealership, give them a quick call to find out what forms of down payment they accept. If you want to be one step ahead, call your bank or credit union to learn about your financing options, as well.
In general, most car dealerships accept:
- Cash—always get a receipt to prove the amount you put down. Cash is often preferred because it shows that you’re serious about making an offer and reduces the amount you’ll have to finance to get the car.
- Check or debit card—this can be the best option because it automatically generates a paper trail and appears on your bank statements.
- Credit card—this isn’t a great option because most lenders charge high-interest rates, and you’ll probably be charging a hefty sum.
- Trade-in—some dealerships let you swap your old vehicle for an agreed-upon amount of money that acts as the down payment for the car you want to get.
How much to put down
There’s no hard and fast rule about how much you’re required to put down. Typically, 20% is considered an average down payment on a new vehicle. This amount basically pays off the car’s first year of depreciation.
If you’re financing a used car, you probably only have to put down around 10% because the used car’s value depreciates slower.
For either type of car, try to put down as much as you can comfortably afford. This enables you to borrow less, so your car payment will be cheaper. You’re also more likely to get approved for financing if you have a reasonable down payment.
Should I use my credit card for my down payment?
You can, but paying with cash or debit card is usually best. Credit card interest rates are generally higher than auto loan rates, so you’ll end up paying more. Think about it—you’ll have a higher credit card bill and you’ll have a separate car payment bill.
Depending on your credit card, you might max out your credit limit too, which can negatively affect your credit score. You might even have a daily spending limit that would prevent you from charging the down payment amount.
The exception to using your credit card for a down payment is if you plan to pay off your credit card immediately. Charging your down payment makes sense if you earn credit card rewards like travel points or cash back.
What to bring if you’re trading in a car
Bring your certificate of title, also called the pink slip, for your vehicle to prove that you’re the owner. If you haven’t paid off the car yet, get the co-signer or lienholder to sign off on the title.
Have the account number for your unpaid trade-in available, too. You can find it on one of your statements or under your account information if you make online payments.
It doesn’t hurt to call your current lender and explain that you’re trading in the vehicle, either. They might be able to smoothly transfer the information to the dealership or facilitate your new financing.
You’ll need to dig out your current vehicle registration, as well. If you don’t have it, contact your local Department of Motor Vehicles (DMV) and request it. If you’re not current on registration, pay to update the tags so you’re good to go.
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Can you get a car with no down payment?
Yes, but you might not get as great of a financing deal, and you’ll probably have a higher interest rate. There are exceptions, however. You might be able to get a car with no down payment if you’ve got fantastic credit and the dealership is offering a special deal.
How can I improve my chances of financing approval?
If you don’t have great credit or your down payment is smaller than you’d like, ask a relative or close friend to co-sign for the loan. Having a co-signer can help you qualify or secure a lower interest rate.
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