Money down on a car is another term for a down payment. Depending on the type of auto loan you apply for, a down payment may or may not be required.

Can You Get a Car with No Down Payment?

What Does Money Down on a Car Mean?There are instances where you don’t need to make a down payment to finance a car. For example, if you have excellent credit, you don’t typically have to put any money down. You’re not as big of a risk when your credit is good, and lenders may offer the option to put no money down. But, even if you have that option, we still recommend you make a down payment.

On the other hand, if you have bad credit, you usually can’t get around the down payment requirement. Subprime lenders nearly always require a down payment, but it isn’t an unreasonable amount – usually $1,000 or 10 percent of the vehicle’s selling price, whichever is less. You don’t need to shell out thousands of dollars to meet the down payment requirement, but if you can, you should put down more than the minimum.

Why is it Better to Put Money Down on a Car?

It may seem like a waste of money, but a down payment is there to help – not hurt – you. If you’re able to budget for a sizeable down payment, say close to 20 percent, you could see three big benefits to this:

  1. Reduced interest charges – The bigger the down payment, the less you have to pay in interest charges, because you're decreasing the amount of your loan. If you can’t qualify for a lower interest rate on an auto loan, making a bigger down payment helps offset the increased interest charges you pay over the loan term.
  2. Decreased time with negative equity – Or, in some cases, no time. Most car owners have negative equity at some point, which means you owe more on the loan than the vehicle’s worth. A sizeable down payment can help decrease the time you spend being underwater on your loan.
  3. Lower monthly payment – Many car buyers look at the monthly payment first when deciding which vehicle they want to finance. What they may not know is the more money they put down, the lower the monthly payment is due to the lower loan amount.

The Bottom Line

A down payment can help make a car loan more affordable in the long run. The trick is to plan a budget ahead of time. Once you have money put aside for a down payment, you can use our Auto Loan Monthly Payment Calculator to estimate how much car you can afford.

If you’re ready to get the car buying process started, but worry your credit is in the way, let Auto Credit Express help. We work with dealers across the country that specialize in helping borrowers in unique situations get financed. Start today by submitting our easy and secure car loan request form.