Down payments range from zero to 20 percent of the car's price, depending on your credit, the lender, and whether you're buying new or used

A down payment is the cash you give upfront when you buy a car. The rest of the purchase price becomes a loan you repay over time. How much you need to put down depends on three things: what the lender requires, what your credit history shows, and what you can afford to pay without emptying your savings.

Lenders use down payment size to measure risk. A larger down payment means you're borrowing less, so the lender loses less money if you stop paying or the car gets repossessed and sold for less than you owe. That's why buyers with lower credit scores often face higher down payment requirements — sometimes 10 to 20 percent — while buyers with strong credit may put down 0 to 5 percent or nothing at all.

The actual dollar amount varies wildly because it depends on the car's price. A 10 percent down payment on a $15,000 used sedan is $1,500. The same percentage on a $45,000 new truck is $4,500. Some lenders set a minimum dollar amount instead of a percentage — for example, $1,000 down regardless of the car's price.

Key Takeaways

  • Down payment requirements vary by lender and your credit score; some lenders require none, while others require 10 to 20 percent of the purchase price.
  • A larger down payment lowers your monthly loan payment and the total interest you pay over the life of the loan.
  • Used cars often require larger down payments than new cars because they depreciate faster and lenders see them as higher risk.
  • Putting down less than 20 percent typically triggers a requirement to buy gap insurance, which covers the difference if the car is totaled before the loan is paid off.

How down payment size affects your monthly payment and total cost

The larger your down payment, the smaller the loan amount, which directly lowers your monthly payment. On a $25,000 car financed over 60 months at 6 percent interest, putting down $2,500 (10 percent) instead of $5,000 (20 percent) increases your monthly payment by roughly $50 and adds about $1,500 in total interest paid.

Down payment size also affects whether you'll owe more than the car is worth — a situation called being "underwater" on the loan. Cars lose value fastest in the first year. If you finance a $30,000 car with a $1,000 down payment and the car drops to $26,000 in value within months, you owe $29,000 but the car is worth $26,000. If it's totaled in an accident, your insurance payout won't cover what you owe the lender.

This risk is why lenders often require gap insurance when your down payment is less than 20 percent. Gap insurance covers the difference between what you owe and what the insurance company pays if the car is totaled. Some lenders include it in the loan; others require you to purchase it separately, usually for $500 to $1,000 upfront or added to your monthly payment.

Down payment requirements by credit score and lender type

Traditional banks, credit unions, and captive lenders (the financing arm of a car manufacturer) each set their own requirements. Banks typically want 10 to 20 percent down and prefer borrowers with credit scores above 700. Credit unions often have more flexible terms and may accept 5 to 10 percent down for members with scores in the 600s. Captive lenders, like Ford Credit or Toyota Financial Services, sometimes offer zero-down promotions to move inventory, though these usually require a credit score above 750.

Subprime lenders — those who work with buyers whose credit scores are below 620 — almost always require 15 to 25 percent down. They also charge higher interest rates, sometimes 15 to 29 percent, which makes the monthly payment much larger even with a bigger down payment.

Your credit score is not the only factor lenders consider. They also look at your debt-to-income ratio (how much you already owe compared to what you earn), your employment history, and whether you have a co-signer. A co-signer with good credit can sometimes lower the down payment requirement even if your own score is weak.

Down payment differences between new and used cars

New cars typically require smaller down payments because they depreciate more slowly and hold their value better in the first few years. A new car loses 10 to 15 percent of its value in the first year, then 8 to 10 percent per year after that. Used cars, especially those more than five years old, can lose 15 to 25 percent of their value in the first year alone.

Because of this steeper depreciation, lenders require larger down payments on used cars — often 15 to 25 percent compared to 10 to 15 percent for new cars with the same credit score. A used car with higher mileage or unknown service history may trigger an even larger requirement.

Certified pre-owned (CPO) vehicles, which come with a manufacturer warranty and have been inspected, sometimes fall between new and used in terms of down payment requirements. They depreciate faster than new cars but slower than non-certified used cars, so lenders may accept 10 to 15 percent down.

How to decide what down payment makes sense for your situation

The largest down payment you can afford without draining your emergency savings is usually the right choice. A down payment should not leave you unable to cover unexpected expenses like medical bills or car repairs. Financial advisors typically recommend keeping three to six months of living expenses in savings before putting extra money toward a car down payment.

If you have high-interest debt — credit card balances above 15 percent interest, for example — paying that down before increasing your car down payment often saves you more money overall. The interest you avoid on credit card debt usually exceeds what you save by lowering your car loan interest rate.

If your credit score is below 650, putting down the largest amount the lender allows can significantly lower your interest rate. The difference between 12 percent and 18 percent interest on a $20,000 loan over 60 months is roughly $2,400 in total interest — often more than the extra down payment costs.

What happens if you can't afford a down payment right now

Zero-down financing exists but comes with trade-offs. Lenders offering it typically require a credit score above 750, a stable income history, and a co-signer. The interest rate is usually 2 to 4 percentage points higher than what you'd pay with a 10 to 20 percent down payment. On a $25,000 loan, that difference adds $2,500 to $5,000 in total interest over five years.

If you're not ready to buy now, saving for a down payment over three to six months gives you time to improve your credit score, which directly lowers the interest rate you'll be offered. A 50-point improvement in your credit score can reduce your interest rate by 1 to 2 percentage points, saving you more than most down payments would.

Another option is to trade in a vehicle you already own. The trade-in value counts as a down payment, reducing the amount you need to finance. If your current car is worth $5,000 and you're buying a $20,000 car, your down payment is effectively $5,000 even if you don't have cash to add to it.

Frequently Asked Questions

Is it better to put down 20 percent or finance the whole car?

A 20 percent down payment typically lowers your interest rate by 1 to 3 percentage points and eliminates the gap insurance requirement. On a $25,000 car, this saves roughly $1,500 to $3,000 in interest over five years. However, if you have high-interest debt or no emergency savings, financing more and keeping cash on hand may be the safer choice.

Can I use a credit card to make a down payment?

Most dealerships do not accept credit cards for down payments because of processing fees. Some will accept a debit card or bank transfer. Using a credit card to pay off a down payment after the fact is possible but expensive — you'd pay credit card interest (usually 15 to 25 percent) on top of your car loan interest.

What if the dealer says I need to put down more than I planned?

You can negotiate or walk away. The down payment requirement is not fixed — it depends on the lender the dealer uses. Ask the dealer to shop your loan to other lenders or get pre-approved financing from a bank or credit union before you visit the dealership. Pre-approval gives you leverage to negotiate the down payment amount.

Does a larger down payment help if my credit score is very low?

Yes, but with limits. A larger down payment can lower your interest rate by 1 to 2 percentage points even with a low credit score. However, if your score is below 580, some lenders will not work with you regardless of down payment size. In that case, improving your credit score for three to six months before buying may save you more money than a larger down payment would.