Trade-in:<\/strong> Some dealerships let you swap your old vehicle for an agreed-upon amount of money that acts as the down payment for the new car you want.<\/li>\n<\/ul>\n\n\n\nBefore you head to the car dealership, give them a quick call to find out what forms of down payment they accept. If you want to be one step ahead, call your bank or credit union to learn about your financing options as well.<\/p>\n\n\n\n
How much to put down for a car down payment<\/h2>\n\n\n\n
Typically, 20% of the purchase price is considered an average down payment on a new car. This amount basically pays off the car\u2019s first year of depreciation\u2014but you don\u2019t have to give this amount if you can\u2019t afford it.<\/p>\n\n\n\n
If you\u2019re financing a used car, you probably only have to put down around 10% because the used car\u2019s value depreciates slower. In any case, try to put down as much as you can comfortably afford.<\/p>\n\n\n\n
The more money you put down, the less money you have to borrow with a loan. Not only will this make your monthly payments cheaper, but you\u2019re also more likely to get approved for financing if you put down a larger down payment.<\/p>\n\n\n\n
Why you shouldn\u2019t use a credit card for a down payment<\/h2>\n\n\n\n
Paying with cash or a debit card is usually better than using your credit card since it\u2019s money you have in hand (or in your bank account) rather than a line of credit.<\/p>\n\n\n\n
Also, credit card interest rates are generally higher than auto loan rates, so you\u2019ll end up paying higher credit card interest charges than the loan is worth.<\/p>\n\n\n\n
Depending on your credit card, you might max out your credit limit, too, which can negatively affect your credit score. Bad credit can make it harder to gain approval for future loans.<\/p>\n\n\n\n
Some credit cards even have a daily spending limit that can prevent you from putting the down payment amount on your card\u2014so if you\u2019re thinking about paying this way, make sure to check in with your credit card company first.<\/p>\n\n\n\n
The exception to using your credit card for a down payment is if you plan to pay off your credit card immediately. Charging your down payment makes sense if you earn credit card rewards like travel points or cash back.<\/p>\n\n\n\n
What to bring if you\u2019re trading in a car<\/h2>\n\n\n\n
Borrowers need to bring your certificate of title, also called the pink slip, for your vehicle to prove that you\u2019re the owner. If you haven\u2019t paid off the car yet, get the co-signer or lienholder to sign off on the title.<\/p>\n\n\n\n
Have the account number for your unpaid trade-in available, too. You can find it on one of your statements or under your account information if you make online payments.<\/p>\n\n\n\n
It doesn\u2019t hurt to call your current lender and explain that you\u2019re trading in the vehicle, either. They might be able to smoothly transfer the information to the dealership or facilitate your new financing.<\/p>\n\n\n\n
You\u2019ll need to dig out your current vehicle registration, as well. If you don\u2019t have it, contact your local Department of Motor Vehicles (DMV) and request it\u2014and if you\u2019re not up-to-date, pay to update the tags so you\u2019re good to go.<\/p>\n\n\n\n
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