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How does a down payment affect a car loan?
My old Nissan finally broke down for the last time and now I’m in the market for a new car. I’m considering buying something new and getting a car loan to cover the cost. I have a large amount of cash saved up for a down payment, but I’m not sure if it's necessary. How does a down payment affect a car loan?
Chloe Jenkins · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
I’m sorry to hear about your Nissan; it’s always a bummer when an old car finally shuts down. A sizeable downpayment for a
car loan
is a great way to get exactly what you want without breaking the bank.The down payment you place on your new car will reduce the amount you’ll need to borrow from the lender, so it’s worth putting down as much as you can. This means you’ll have lower monthly payments and save on interest over the life of the loan.
A larger down payment also makes it easier for you to get approval on car loans, especially if you have a lower credit score. Putting more money down for a car means you pose less of a risk to lenders, increasing your chances of approval.
Remember that when you finance a car, lenders will require full coverage, which can be pricey. That doesn’t mean it has to break the bank. Before you buy your car, use the number-one-rated car insurance app,
Jerry
, to help you find lower insurance rates. Jerry compares personalized quotes from more than 50 top providers, including Nationwide, Allstate, and Travelers, and delivers the best deals to your phone in minutes for free. The average Jerry driver saves $879 a year on car insurance!View full answer
- Gregory R.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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