If you’re buying a used car and financing the purchase, you’ll need to figure out how much money you want to put down and how much you want to finance.
Experts generally advise putting down at least 10 percent to 20 percent of the purchase price when you’re buying a used car or a new car. A down payment of that size helps protect you against continuing depreciation, which is generally about 20 percent a year. It also reduces your monthly payments.
If you’re getting a used car loan and are unable to put down at least 10 percent, prospective lenders are likely to be suspicious about your ability to repay the debt. That could influence whether the loan is approved, or increase the interest rate you’ll pay.
Figure out what your monthly payments will be after buying the new car, based on the down payment and the total amount borrowed. Experts say your payments shouldn’t eat up more than 15-20 percent of your net monthly income.
Calculate your monthly auto payment