What is the ideal down payment amount (in %) for a $20k vehicle loan?

Question

I'm thinking about buying a new vehicle in a few months. My credit is good (700+); I have no qualms about a $400 payment for 48 months. This would be my only vehicle payment I'll have in ~six months. Is there an ideal percentage to have as a down payment on a car? You could finance it to death, but you'll be paying for it forever as well. Obviously, 100% (e.g. paying cash) is optimal, but I'm not holding that winning Powerball ticket, either! (ha!). Looking forward to your responses; thanks!

All answers to this point have assumed "car/truck" - it was not specified in my original question and comment, but is it the same if we're talking about a motorcycle?

Answer 1

It depends on the interest rate. Generally with that kind of score you should be looking to get a nice low rate, of course I've no idea if that is different with motorcycle versus a car. But let's assume that you can get something around 7% or less.

Well when you look at your overall debt picture, ask yourself this: Do you have any other debt at all such as credit cards or personal loans with an interest rate higher than whatever rate you qualify for with your vehicle. If you do, pay down the smallest down payment they will accept (should be 5% or less with your credit). Then take the extra down payment money and use it to pay down your more expensive debt.

Generally, when you owe money you always want to pay down your expensive debt such as high interest credit cards first, and then work down to your lowest interest debt last such as mortgage and student loans.

Frankly, that payment sound awfully high and long for a motorcycle. From my limited knowledge of bikes I didn't think they lasted as long or held their value as much as a car. So be very careful you don't end up in a negative equity situation a year or two from now. Ensure you are getting a reasonable rate too.

Answer 2

With a motorcycle, the more you put down the better-- they can depreciate even more depending on the market becuase its not like a car where everyone is always wanting one.

If your buying new, go with 15%+ down on a car as they depreciate immediately and you'll save money by not having to add gap insurance (it pays off your loan and not just the replacement cost of the vehicle).

Used, if you shop around, you can do 0 down or 10% and be okay. Just comparison shop! I'm looking at a used 2007 Dodge Caliber and the EXACT same model ranges from 13,8000 to 18,900 depending on the dealership.

Answer 3

furnish the criteria to Judy. you want to boost your credit and also you do not have everywhere the sales to qualify for such an expensive living. at the same time as think ofyou've got your credit prolonged and characteristic more beneficial of a down price seem for an low priced position of living, yet be careful of severe position of living company prices. in the shape you do purchase an area ultimately, experience some 2 br 2 bath position and employ a room to a roommate and use the money to pay down the loan swifter. once you eventually end up now no longer a student, till you come across a interest, your earnings will be simplest $1800 a month.

Answer 4

For me personally, since I don't like paying interest on anything, put as much as you can afford down on the car and every month if you have any extra money, pay extra towards the principal of that loan. The faster you pay it off, the less you are paying in interest.

You can seriously save a lot of money by paying it off quicker than your 48 month loan period.

I don't think there is an ideal amount of down payment though. It just depends on what you can comfortably afford.

Answer 5

It will depreciate 15% to 20% when you drive it off the lot. That is a good start. You might think about a pre-owned or program car where the previous owner has taken the hit on the depreciation (provided the dealer is asking a fair price).

Answer 6

I got into a 2007 escape that was about 21,000 for 5.9% intrest, 363. a month with no money down. and My credit is lower than yours. You shouldnt have any problem getting the 400/month! Just haggle!

Answer 7

With a 700 score you should not have to put any money down. The dealer is going to push for around 20% but it really is not required. I get people approved everyday with no money down.

Answer 8

10%