How Much Should I Put Down on a Car?
Enter the price, down payment, rate and term to see the payment — and the interest a bigger down payment saves.
Short answer: aim for 20% down on a new car and 10% on a used car. On a $35,000 new car, 20% is $7,000 — financing the remaining $28,000 at 7% APR over 60 months costs about $554 a month. With nothing down the same car runs $693 a month. The bigger reason for 20% is not the payment: it keeps you from owing more than the car is worth while it depreciates fastest.
Payments assume 7% APR over 60 months. 20/4/10 is a common guideline, not a rule. Figures from the calculator below.
How much should I put down on a car?
The common guideline is 20% down on a new car and 10% on a used one. New cars lose value fastest in the first year, so a larger down payment keeps you from owing more than the car is worth.
| Car price | 20% down | Payment after 20% down | 10% down | Payment after 10% down |
|---|---|---|---|---|
| $20,000 | $4,000 | $317 | $2,000 | $356 |
| $25,000 | $5,000 | $396 | $2,500 | $446 |
| $30,000 | $6,000 | $475 | $3,000 | $535 |
| $35,000 | $7,000 | $554 | $3,500 | $624 |
| $40,000 | $8,000 | $634 | $4,000 | $713 |
| $50,000 | $10,000 | $792 | $5,000 | $891 |
Payments assume a 7% APR over 60 months — an assumption, not a benchmark. Your rate depends on credit score, term and lender. Payment = loan × r ÷ (1 − (1 + r)−n), the same formula the auto loan calculator uses.
Why 20%
- It keeps you right-side up. A new car can lose roughly 20% of its value in the first year. Put 20% down and your loan balance stays near the car’s value instead of above it.
- It cuts the payment. On a $35,000 car at 7% over 60 months, 20% down means $554 a month versus $693 with nothing down.
- The 20/4/10 rule. A widely cited guideline: at least 20% down, finance for no more than 4 years, and keep total monthly vehicle costs under 10% of gross income.
Frequently asked questions
How much should I put down on a car?
A common guideline is 20% down on a new car and 10% on a used one. On a $35,000 new car that is $7,000, bringing a 60-month loan at 7% APR to about $554 a month instead of $693 with nothing down. A larger down payment also keeps you from owing more than the car is worth.
What is the 20/4/10 rule?
A widely cited car-buying guideline: put at least 20% down, finance for no more than 4 years, and keep total monthly vehicle costs (payment, insurance, fuel, maintenance) under 10% of gross income.
Is it bad to put no money down on a car?
It is allowed, but it raises the payment and the total interest, and it usually leaves you owing more than the car is worth for the first year or two. If the car were totaled in that window, insurance pays market value, not your loan balance.
Should I put 20% down on a used car too?
Used cars have already taken the steepest depreciation, so 10% is the usual guideline. More is still better: every dollar down reduces the amount financed and the interest charged on it.