If you want to, you can definitely make a 50% down payment on a car if you have the cash. It's uncommon, but as long as you finance at least the minimum amount – usually $5,000 if you have bad credit – lenders don’t have a problem with you making a really big down payment.
How a Larger Down Payment Helps Your Loan
For bad credit car buyers, the most common down payment typically asked for by lenders is $1,000 or 10% of a vehicle's selling price, whichever is less. However, we recommend that you make a larger down payment for the most benefit if you have poor credit, such as around 20%.
When you make a really large down payment, say around 50%, you’re going to see your auto loan really change for the better. Making a down payment as large as 50%t not only improves your chances for car loan approval, it also:
- Reduces interest charges
- Gives you a much smaller monthly payment
- Allows you to avoid negative equity
- Dramatically reduces the size of your loan
To see how a large down payment can help you, let’s take a look at an example. Say you want to finance a vehicle with a selling price of $15,000, and you were approved at an interest rate of 17%. Here’s how large down payment amounts affect your loan (calculations don’t include tax, title, and license fees):
| Down Payment | Loan Term | Monthly Payment | Total Interest Paid |
| $3,000 (20%) | 60 | $298 | $5,894 |
| $5,250 (35%) | 60 | $242 | $4,789 |
| $7,500 (50%) | 48 | $216 | $2,888 |
| $10,000 (Typical max down payment amount) | 36 | $178 | $1,418 |
Disadvantages of a Larger Down Payment
While you save more money by making a larger down payment, there are some disadvantages you need to be aware of. The two biggest cons of making a down payment that’s around 50 percent are:
- More money down doesn’t lower your interest rate – Bad credit car buyers get higher than average interest rates, and it’s extremely rare that a larger down payment can lower it. You typically can’t negotiate your interest rate with a lender, and providing more money down isn’t a guaranteed solution if you’re worried about your rate.
- A larger down payment cuts into your savings – Depending on the vehicle you choose to buy, 50 percent can be a lot of money to put down on an auto loan. You can use cash, trade-in equity, or a combination of both to make a larger down payment, but make sure you can afford to take that money out of your savings right now.
CarsDirect Tip: When budgeting for a car loan, don’t forget to include extra costs such as fuel and basic maintenance on top of insurance, taxes, and title fees. You may have the money right now to make a 50 percent down payment, but if something happens to your vehicle, make sure you have enough cash to cover emergency costs.
Ready to Get the Car Buying Process Started?
A larger down payment does help you save money on your auto loan, but it may not be practical if you’re on a tight budget. Make sure you know how much car you can afford, and how you plan on coming up with a down payment. If you’re stuck on what vehicle to choose, check out our new and used car sections to compare models.
Once you have an idea of what vehicle you want to invest in, CarsDirect can also point you in the direction of the right dealership for you. Fill out our no-obligation, free auto loan request form to get the process started right now.
FAQs
Typically speaking, if you're going to finance a vehicle, you should aim to pay as much as you can comfortably afford upfront. Depending on the cost of the car, you should aim to make a down payment of at least 20%, though it's not unusual for a buyer to pay 30, 40, or even 50% upfront.
Can you do a 50% down payment on a car? ›
If you want to, you can definitely make a 50% down payment on a car if you have the cash.
Is 50% downpayment too much? ›
Putting 50% down on a home could minimize the amount of interest you pay throughout the life of your loan. But a 50% down payment may be a lot of cash to tie up in a home, and you might risk having to borrow more expensively down the line.
Is it good to put half down on a car? ›
In general, you should strive to make a down payment of at least 20% of a new car's purchase price. For used cars, try for at least 10% down. If you can't afford the recommended amount, put down as much as you can without draining your savings or emergency funds.
What's the highest down payment you can put on a car? ›
The typical down payment for a car is between 10% and 20% of the vehicle's total value. Used cars usually require down payments closer to 10%, while the down payment for a brand-new car is generally closer to 20%. As with a mortgage, the down payment for an auto loan is a major expense.
Is 40% down on a car good? ›
There is no true one-size-fits-all answer to how much you need to put down on a vehicle. However, a good rule of thumb when buying a new vehicle is to have your down payment by 20% or more of the total purchase price. If you are buying a used vehicle, you may be able to put 10% down.
Is it wise to put a large down payment on a car? ›
Putting down a larger down payment will increase your equity because you won't need to finance as much through a lender. Cars are a depreciating asset. As the value of your vehicle decreases, you're more likely to go upside down on your loan — when you owe more than your car is worth.
Can you put a 90% down payment on a car? ›
While most lenders do require a down payment on a car, most will allow you to put down any amount you desire.
What's a good down payment on a 30k car? ›
Consider putting at least $6,000 down on a $30,000 car if you're buying it new or at least $3,000 if you're buying it used. This follows the guidelines of a 20% down payment for a new car or a 10% down payment for a used car.
Can a down payment be too big? ›
You can often secure better rates with a larger down payment, but you also need to understand how much you can afford. Paying too little for your down payment might cost more over time, while paying too much may drain your savings. A lender will look at your down payment and determine which mortgage is best.
Start-ups and short trips are where the most wear occurs in an engine. A cold engine is under-lubricated and it takes a few seconds for the oil to completely coat the surfaces. The metal itself will begin to expand as the engine warms up and this places stress on all of the gaskets and seals.
Is $2000 enough for a down payment on a car? ›
If you're considering a car that costs $25,000, putting down between $2,000 and $4,000 would be wise. However, the true answer to this question depends on your negotiation strategy. If you can negotiate a lower price or better terms, putting more money down may not save you much interest.
Is it better to put money down on a car or pay extra principal? ›
YOU'LL GET A BETTER DEAL ON A CAR LOAN
If you make a down payment, you'll still finance or borrow the remainder of the cost. But the payment reduces your loan-to-value ratio—the amount of your loan divided by the cash value of the vehicle. A lower loan-to-value ratio often leads to better loan deals.
What are the disadvantages of a large down payment on a car? ›
What Are the Disadvantages of a Large Down Payment? Providing more money down doesn't guarantee a lower interest rate, and it can cut into your savings. Depending on the vehicle you choose to buy, 50% can be a lot of money to put down on an auto loan.
What car payment is too high? ›
According to experts, a car payment is too high if the car payment is more than 30% of your total income. Remember, the car payment isn't your only car expense! Make sure to consider fuel and maintenance expenses. Make sure your car payment does not exceed 15%-20% of your total income.
How to make a large down payment on a car? ›
Use a money order or electronic funds transfer (ETF): Because most dealerships won't accept a large down payment in physical cash, consider using a money order to certify the funds or have your bank transfer them electronically.
What is the lowest down payment for a car? ›
Some auto loan lenders don't require down payments, but their loans typically come with high interest rates. Many other lenders have minimum down payment percentages, often ranging from 9% to 12%. If a down payment that's at least 9% of a car's value is too much for you, you may need to consider a cheaper car.
What are the disadvantages of a large down payment? ›
Drawbacks of a Large Down Payment
- You will lose liquidity in your finances. ...
- The money cannot be invested elsewhere. ...
- It is inconvenient if you will not be in the house for long. ...
- If the home loses value, so does your investment. ...
- You might not have the money to begin with.
Not all lenders require a down payment, but NerdWallet suggests putting down at least 20% of a new car's purchase price, or 10% for a used car.
