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Should I put 50% down on a car loan?
Is a 50% down payment too much for a car loan? I want to buy a $32,000 vehicle and I have 50% to put down. I've heard different things about how much you should put down on a car loan.
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
A 50%
downpayment
on a car loan is extremely rare. Most people put a maximum of 20% down for various reasons. It might be all they can afford, but there’s more at play.There are upsides to putting 50% down:
- reduce the interest you pay
- lower your monthly payment
- avoid negative equity
However, it also has some downsides:
- it won’t reduce your interest rate
- it will cut into your savings exponentially
If you can afford having a $16,000 debit from your savings, go for it. Otherwise, putting 20% down will give you far more liquid funds and might only cost you a few hundred bucks in interest over the life of the loan.
Before you buy your car and apply for loans make sure you look at
car insurance
. Lenders and dealerships
will require it and will check. You can get coverage fast with the Jerry
app. Jerry will compare 50+ top insurers so you know you’ll be getting the best deal on the coverage you need.View full answer
- Gregory R.
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