The Down Payment On A Car- What You Need to Know

When you set out to buy a new car, financing is one of the most important things to consider. An important aspect of your loan is figuring how much your down payment on a car will be. Follow the steps below to get the best deal on your car loan and request your free no obligation to buy new car price quote today!

Tips For Getting a Good Deal on a Car Loan

No matter the purchase price you negotiate, the financing terms you agree to will determine whether you are getting a good deal on your new ride. It's crucial to know exactly what you're spending, from the APR to the down payment on a car.

Consider the Loan's Total Cost

When you're shopping for a car loan, the first important figure to consider is the annual percentage rate, or APR. This is the percentage of interest you will pay on the loan each year. A lower APR will make a big difference in the cost of the vehicle.

You also need to pay attention to the loan term. While a longer loan term means your monthly payments are lower, you will end up paying more over the life of the loan. You should select the shortest loan term you can afford. This is the best way to avoid being “upside-down” on a car, meaning you owe more than it's worth.

You can also avoid being “upside-down” by putting a larger down payment on a car. It's recommended that your down payment or trade-in is at least 15 percent of the cost of the new car.

Where to Shop for an Auto Loan

By arriving at the dealership with financing offers already in place, you set yourself up in the best position for negotiations. It also helps you avoid common sales tactics like confusing the price of the vehicle and the costs of financing. This way, you can get right down to negotiating the purchase price of the car, which is what experts recommend.

There are several different resources you can look into for auto financing. One is your local bank. because banks have conservative lending policies, they are often in a position to offer very low rates. You can often check the bank's current loan rates on their website. However, they may only be able to offer loans to those with great credit.

Another option is a credit union. Credit unions are similar to banks, but they offer loans only to members. They are not-for-profit, and therefore have lower operating costs, so they are also often able to offer great low financing rates.

The dealership is also an option for financing, though some experts recommend against it. That's why you should get preapproved beforehand, so you will be able to compare loan offers to see which is best. While dealers sometimes offer special incentives, like 0 percent financing, you may have to choose between the special financing and other offers like rebates. When you crunch the numbers, you may be better off taking the rebate and financing elsewhere, even at a slightly higher rate.

3 New Cars with Low Monthly Payments

You don't necessarily have to spend a lot on monthly car payments to get a great car. We located three great cars, all which are available for under $300 per month. To calculate, we used an average APR of 3.7 percent, 65-month lease term and ten percent down payment on a car.

*Keep in mind that these serve only as examples and may no longer be available when you read this.

Chevrolet Sonic LTZ
Chevy's subcompact 4-cylinder Sonic features a fuel-efficiency of up to 35 miles per gallon for highway driving. This four-door has a surprisingly spacious back seat and loads of features on the LTZ model, including heated leather seats, Bluetooth and cruise control. $300 per month covers the Sonic LTZ with manual transmission, so drivers who require an automatic will need to downgrade to the LT. You may want to consider learning to drive a manual transmission, because these aren't features you'd normally get for $300 per month! Also included are side-curtain and knee airbags in the front seats.

Ford Fiesta SE
While budget-conscious shoppers at the Ford dealership may find themselves attracted to the base-level Focus, the brand's Fiesta SE warrants serious consideration. Priced at about $17,000, it will only cost $270 per month. The Fiesta SE comes well-equipped with remote keyless entry, power windows and A/C. It also features Ford's infotainment system, SYNC, as well as a USB port and auxiliary jack for music players.

Kia Soul +
Finally, those looking for a more stylized option should take a look at Kia's Soul +. This 5-door hatchback gets 29 miles per gallon in the city, and features unmatched personality for the money. Well equipped with cruise control, A/C and keyless entry, as well as SiriusXM satellite radio and 16” alloy wheels, it's a steal at under $300 per month. It's safe, too-- standard anti-lock brakes are included, along with side curtain airbags and advanced traction and stability control.

Car buying is one of the biggest financial decisions many people make, and the down payment on a car is a big factor. Request your free no obligation to buy new car quote today and see offers from dealers in your area!