How Much Down Payment On Car? Indianapolis, IN | Andy Mohr Nissan

When considering how much down payment you should put on a car, it’s a good idea to budget for 15-20% of the car’s total value. Doing this can possibly lower your monthly payment, help you pay off the car faster, and may even decrease your interest accrual.

At Andy Mohr Nissan, we have drivers in the Indianapolis, Lawrence, and Speedway areas frequently ask us questions like, “How much down payment should I put on a car?” Check out this guide for our answer and feel free to contact us for more information.

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Why You Should Put a Down Payment on a Car

When you’re considering the budget for your next car, there are many advantages to putting down 15-20% or more on your car. Just a few of them include:

• Lower Monthly Payments:

A higher down payment means paying off more of your car in advance, thereby decreasing the total amount you’re financing. This means, if you choose to keep your loan term constant, you’ll likely have a lower monthly payment every month.

• Shorter Loan Terms:

On the other hand, you can choose to keep your monthly payments higher and shorten your loan term. This means you may pay off your car faster than you would if you had a lower down payment.

• Less Interest Accrual:

With a higher down payment, you may accrue less interest on your loan over time. This can happen for several reasons. One is that you’re decreasing the total amount you’re financing. A lower loan amount often accumulates less interest overall. Also, if you’re able to shorten your loan term and pay off your car faster, that’ll decrease the amount of time your loan spends accumulating interest.

How to Calculate a Car Payment Budget

When considering how much down payment you want to put on a car, think about the monthly budget you’d like. As we already mentioned, a higher down payment often results in a lower monthly payment if you keep the loan term equal.

A good rule of thumb is to keep your monthly car costs around 20% of your monthly income. These costs include:

• Monthly payments
• Insurance and registration costs
• Gas/maintenance/repairs

Once you know what monthly costs fit your budget, you can then calculate what kind of a down payment and loan term will help you build a plan that works for you. Our finance center will also be happy to help you with this. 

What About Leasing a Car?

If a 15-20% down payment on a car isn’t ideal at the moment, leasing is always a good alternative. Often, leases don’t require as much up front. They may also result in a lower monthly payment than you’d have if you’d bought the same car. This is because you’re only responsible for financing the cost of driving the car during the length of your lease—usually two or three years.

The best part is, when your lease is over, you can easily swap your car for the newest version, or buy it out and drive it home to keep.

Find Out How Much Down Payment You Should Put on a Car

If you have any other questions like “how much down payment should I put on a car?”, feel free to reach out to the finance center at Andy Mohr Nissan. We’ll gladly answer all your questions and work with you one-on-one to explore your options for financing a car in the Indianapolis, Lawrence, or Speedway area.

Contact us today!

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