How to Make a Down Payment on a Car

by Chris Miksen ; Updated September 11, 2015

When purchasing a car, you have the option to buy the car outright, obtain financing from your bank or obtain financing at the dealership. A down payment is money paid upfront to a dealership and serves as a way to lessen the impact of a car loan by lowering your monthly payments. Because a down payment reduces the amount of money you need to borrow, your interest rate on a loan may be less than it would be if you didn't make a down payment. The down payment is made at the dealership.

Decide if you want to lease or finance the car. Down payments are typically required and almost always advised when financing a car, but rarely required and almost never advised when leasing a car.

Determine the maximum down payment you can make. Edmunds.com explains that a 20 percent down payment is ideal because the down payment pays off the car's first year deprecation. However, if making a 20 percent down payment will put a strain on your finances, make a lesser down payment, such as 15 or 10 percent. You can make a down payment of more than 20 percent, if you wish.

Obtain financing and provide the dealer with the down payment. Most car dealerships accept down payments in the form of cash, checks or debit cards. If a dealership accepts a debit card as payment, then credit cards are also usually accepted. Unless you can pay it off immediately, you should avoid making a down payment on a credit card.

About the Author

Located in Pittsburgh, Chris Miksen has been writing instructional articles on a wide range of topics for online publications since 2007. He currently owns and operates a vending business. Miksen has written a variety of technical and business articles throughout his writing career. He studied journalism at the Community College of Allegheny County.