How much should you put down on a car?
A common guideline is about 20% down on a new car and about 10% on a used one. The exact amount is up to you, but a bigger down payment means a smaller loan, a lower monthly payment, and less interest over the life of the loan.
It also protects you from owing more than the car is worth. New cars lose value quickly in the first year, and a small down payment can leave you with a loan balance above the car's resale value. The negative equity calculator shows whether that has happened to you.
How this calculator works
Each month your balance earns interest at the monthly rate (the APY divided by 12, a close approximation), then your deposit is added at the end of the month. The calculator repeats that month by month until your balance reaches the goal. The goal is your car price multiplied by the down payment percentage.
Ways to reach your goal sooner
- Set up an automatic transfer on payday so the deposit happens before you can spend it.
- Keep the money in a high-yield savings account instead of a standard checking account.
- Add one-time money to your savings, like a tax refund, a bonus, or the sale of an old car.
- Aim at a slightly cheaper car. Lowering the price also lowers the down payment target.
Frequently asked questions
Can I buy a car with no money down?
Some lenders allow it, but you will borrow the full price and pay more interest. You also start the loan owing more than the car is worth, which is risky if the car is damaged or you need to sell it early.
Does my trade-in count as a down payment?
Yes. The value of your trade-in can be used in place of cash. If you plan to trade in a car, subtract its value from your goal by entering it as money you have already saved.
Is the interest on my savings taxable?
In the United States, interest from a regular savings account is generally taxable income. The amount in this calculator is before taxes.