RubyKnite
Contributor

How much should I consider putting down on a new car purchase?  Is there a fine line between lowering my monthly payments and setting myself up for a big loss if something happens to the new car (e.g. stolen, act of God, accident)?

 

RubyKnite

3 REPLIES

It's always better to put down more (and if possible, pay cash) in my opinion since that means you're paying less for the car overall. It's the same loss regardless. You definitely never want to owe more than the car's worth.

I think this answer is different for everyone. Don't ever use all your cash. Look at what interest rate you will pay and compare that to how much you can earn on that money you are considering for a downpayment. If your car lown rate is say, 3% and you are earning 6% in a mutual fund, then you are better off to use a small downpayment and invest the rest. Another thing to look at is any credit card debit that you are paying interest on. You will save more in interest payments on a card balance than on an auto loan. Just a different perspective to think about.

Hi RubyKnite,

I am not a financial expert, so I found a few similar questions that members have asked our CERTIFIED FINANCIAL PLANNER™ in the Ask USAA section of the community:

 

https://communities.usaa.com/t5/Financial-Advice-Q-A/What-is-an-appropriate-car-payment/qaq-p/8958/c...

 

https://communities.usaa.com/t5/USAA-News/INSIGHT-Outsmarting-the-Car-Dealer/ba-p/44204

 

Thank you for posting and good luck!