a man leaning against a car at the dealership looking like he's thinking hard about his purchase

So you’ve found the car of your dreams — you just need to know how to pay for it. If you are planning on financing your car through a credit union, you will need to know how much to offer as a down payment before securing an auto loan.

Estimating How Much To Put Down On A Car

Determining the right amount of money for your next car is a simple process that can be done in three major steps:

  1. Understand the total purchase price of your vehicle. Ensure that you are calculating things from the perspective of APR (all fees) rather than interest (principal balance only).
  2. Think about your desired loan terms on your next vehicle. You know how much you want to spend on your vehicle. Now you need to translate that into a monthly payment that makes sense to you.
  3. Ask your lending institution about required down payment amounts or percentages. You may be required to provide a very specific amount to qualify for financing.

The average down payment for a used car in the US today is roughly 10% of the purchase price. New vehicles fall around the 12% mark, although researchers suggest 20% as a good starting point. Ultimately, the right down payment amount for you boils down to your financial situation.

Auto Loan Down Payment Definitions

Calculating the right down payment amount can be tricky if you don’t understand all of the important terms. Get your terms and definitions explained with some help from GHS FCU.

Max vs. Min Down Payment

Down payments are any sum of money paid to lower the cost of a purchased vehicle before financing takes place. In addition, down payments secure your vehicle and prevent other interested parties from making a move to buy.

Purchase Price

The purchase price of your vehicle is the dollar amount it is worth when you buy. Be sure to include sums such as taxes, titles, and fees if they are to be included in your loan structure.

Interest Rates

The interest rates of your auto loan are influenced through many factors, including credit scores, payment histories, and more. Simply put, interest is a percentage of the total loan paid back to the bank for the opportunity to borrow money.

Loan Terms

Loan terms involve the length of time you choose to pay the money back to your credit union. GHS FCU offers auto term lengths ranging from 48 to 84 months. Bear in mind that the term length of your loan will significantly impact your final costs.


Amortization is a term that refers to the gradual paying down of a loan over time. It involves making regular payments in such a way that your remaining balance drops to zero by the end of the loan term period.

Amortization Schedules: Min vs. Max Down Payments

Here’s an example of an amortization schedule for both smaller and larger down payments:

Example A: Lower Payment

Purchase Price: $20,000

Interest Rate: 2.99%

Term Length: 5 years (60 months)

Down Payment: $2,000

Total Paid: $19,401.31

Example B: Higher Payment

Purchase Price: $20,000

Interest Rate: 2.99%

Term Length: 5 years (60 months)

Down Payment: $5,000

Total Paid: $16,167.83

Choose Right With GHS FCU

Once you have determined the right down payment for your lifestyle, it will be time to secure financing from the credit union that’s all about you.

Get in contact with our professionals by calling, clicking, or visiting with the team at GHS FCU to learn more about our competitive auto loans and great APR rates. We’re looking forward to serving you!

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