When you’re in the market for a used car, there are many factors to consider, including color, style, make, and model. However, determining how much you want to put down upfront can help you narrow down your options and ensure you end up with a monthly payment you can afford. Here are some helpful hints for determining how much to spend on your down payment.

How to Calculate a Down Payment for a Used Car

1. Check Loan Terms

Lenders who provide loans for car financing often adjust their interest rates based on the size of the down payment. If you let them know you’re prepared to offer a larger down payment, they might be motivated to negotiate a lower interest rate. The lender may also be willing to reduce the length of loans for used cars and used trucks if they get more money at signing.

2. Analyze Your Monthly Budget

Look at your current income and expenses and figure out how much money you’re willing to spend on a car payment each month. Most lenders prefer to see a 20% down payment, but you can do more or less depending on your budget. Keep in mind that the more money you put down upfront, the lower your monthly car payment will be. Depending on your interest rate, every $1,000 you put down typically reduces your monthly payment by $25 or more.

3. Consider Your Choice of Vehicle

Part of the reason lenders require a down payment for auto loans is to offset the vehicle’s depreciation. Used cars don’t depreciate as quickly as new ones, so lenders generally ask for less money down for older vehicles. If you choose a car with a high resale value, it makes sense to pay a larger down payment. That way, if you decide to sell the vehicle before you’re done paying off the loan, it may be worth more than the amount you still owe.

Once you calculate the down payment you can afford, head to Paniagua Auto Mall in Dalton, GA. Their honest, reliable team offers a large selection of quality used cars at competitive prices. Whether you’re in the market for an affordable Ford® or Chevrolet® or are interested in a luxury Lexus® or Porsche®, they have options to meet your needs. To help reduce the price of your new ride, you can even trade in your current vehicle. Visit the website to browse their inventory of used cars or call (706) 529-1919 to schedule a test drive today.