If you want to, you can definitely make a 50% down payment on a car if you have the cash. It's uncommon, but as long as you finance at least the minimum amount – usually $5,000 if you have bad credit – lenders don’t have a problem with you making a really big down payment.
How a Larger Down Payment Helps Your Loan
For bad credit car buyers, the most common down payment typically asked for by lenders is $1,000 or 10% of a vehicle's selling price, whichever is less. However, we recommend that you make a larger down payment for the most benefit if you have poor credit, such as around 20%.
When you make a really large down payment, say around 50%, you’re going to see your auto loan really change for the better. Making a down payment as large as 50%t not only improves your chances for car loan approval, it also:
- Reduces interest charges
- Gives you a much smaller monthly payment
- Allows you to avoid negative equity
- Dramatically reduces the size of your loan
To see how a large down payment can help you, let’s take a look at an example. Say you want to finance a vehicle with a selling price of $15,000, and you were approved at an interest rate of 17%. Here’s how large down payment amounts affect your loan (calculations don’t include tax, title, and license fees):
| Down Payment | Loan Term | Monthly Payment | Total Interest Paid |
| $3,000 (20%) | 60 | $298 | $5,894 |
| $5,250 (35%) | 60 | $242 | $4,789 |
| $7,500 (50%) | 48 | $216 | $2,888 |
| $10,000 (Typical max down payment amount) | 36 | $178 | $1,418 |
Disadvantages of a Larger Down Payment
While you save more money by making a larger down payment, there are some disadvantages you need to be aware of. The two biggest cons of making a down payment that’s around 50 percent are:
- More money down doesn’t lower your interest rate – Bad credit car buyers get higher than average interest rates, and it’s extremely rare that a larger down payment can lower it. You typically can’t negotiate your interest rate with a lender, and providing more money down isn’t a guaranteed solution if you’re worried about your rate.
- A larger down payment cuts into your savings – Depending on the vehicle you choose to buy, 50 percent can be a lot of money to put down on an auto loan. You can use cash, trade-in equity, or a combination of both to make a larger down payment, but make sure you can afford to take that money out of your savings right now.
CarsDirect Tip: When budgeting for a car loan, don’t forget to include extra costs such as fuel and basic maintenance on top of insurance, taxes, and title fees. You may have the money right now to make a 50 percent down payment, but if something happens to your vehicle, make sure you have enough cash to cover emergency costs.
Ready to Get the Car Buying Process Started?
A larger down payment does help you save money on your auto loan, but it may not be practical if you’re on a tight budget. Make sure you know how much car you can afford, and how you plan on coming up with a down payment. If you’re stuck on what vehicle to choose, check out our new and used car sections to compare models.
Once you have an idea of what vehicle you want to invest in, CarsDirect can also point you in the direction of the right dealership for you. Fill out our no-obligation, free auto loan request form to get the process started right now.
