How Will My Down Payment Affect My Auto Loan Rate?

There is nothing better than the feeling of a new car. Another contributing factor to your new car bliss, is getting a low interest auto loan rate and knowing that you received the best auto loan value for your money. How will your down payment amount affect your auto loan?

Aside from having an excellent credit history, a substantial down payment can positively affect your auto loan rate. If you are willing to make a decent down payment on a new vehicle, the lender may be able to qualify you for the best interest rate offerings they have. Because the down payment represents instant cash in the pockets of lenders, they will be more flexible when it comes to payments and rates.


Down payments for auto purchases are very small in comparison to the size of the purchase. Consumers tend to put down about 5% of the price when purchasing a car, thus ending up with a larger loan amount and more sizable monthly payments. The more money you can put down, the more equity you will have built into the vehicle. And perhaps, you’ll have more power to negotiate a better interest rate for your loan.

Financial institutions as well as car dealerships can be swayed by your commitment of putting down a large down payment on a car. If you can put 20% down, not only may you qualify for a lower auto loan rate, you will also have smaller loan payments.

Buying a new car can be thrilling for many individuals. To help your purchase go smoothly, do your research and save money for a sizable down payment.