 TITLE: How Much of a Down Payment Should You Make on a Car? CONTENT: How to Save for a Down Payment\n------------------------------\nYou can take many approaches to saving up for a down payment. Here are four of them:\n1.  Create a budget. Establishing a spending plan gives you a better handle on your income and spending, and gives you a better idea of where you can carve out money for a down payment.\n2.  Set a goal. Let's say you want to make a down payment of $2,500. If you map out a strategy for what you'll need to do and how long it'll take to get there, it'll be easier to reach the $2,500 goal line. If you can set aside $200 a month, it'll take a little more than a year to save up enough for your down payment, so either plan your vehicle purchase around that or try to accelerate your saving if you can't wait that long.\n3.  Cut spending. Dialing back on big purchases, dropping unused memberships and trimming your clothing budget are among the ways you can decrease spending and increase the amount of money to set aside for a down payment.\n4.  Reduce the use of credit cards. Putting away your credit cards, at least temporarily, can lower your debt load. This can leave more money to put away for a down payment.\nYou might even pursue all four of these strategies to save for a sizable down payment. You may also borrow money from a friend or family member, take on a second job, sell your old car or sell other belongings. If you don't think you're able to save enough, you might consider looking for cheaper driving options.  \nHow to Lower Your Monthly Car Payment\n-------------------------------------\nIf your goal in making a larger down payment is to reduce your monthly costs, making a bigger down payment isn't your only option. Explore doing the following:\n1.  Bump up your credit score. A higher credit score can lead to a lower interest rate and, therefore, a lower monthly car payment. A credit score below 600 might mean an interest rate of around 11% or more on a new car, while a credit score of at least 750 could land you an interest rate in the 4% range, according to Experian's State of the Automotive Finance Market for the second quarter of 2020. If you check your credit score and don't like what you see, you can take steps to improve it such as paying your bills on time, chipping away at your credit card balances and catching up on past-due payments.\n2.  Shop around for auto loans. Check with various lenders, including banks and credit unions, to see who might offer the best lending terms (including an attractive interest rate). With that information in hand, ask the car dealership whether it can offer a better financing deal.\n3.  Lower your expectations. So, you've got your eye on a fancy brand-new sports car. Well, getting behind the wheel of that ride might come at a steep price. Maybe you can buy that car if you settle for the base model without any of the bells and whistles. Or perhaps you can settle for a less costly but perfectly fine new model that will still get you where you need to go. Or you might even choose a top-quality yet lower-priced used car.\nThe Bottom Line\n---------------\nScraping together money for a down payment might feel like a roadblock to buying a new or used car. But whether you decide on a down payment of 10%, 20% or another amount, you can make sure the road toward that new or used car is smooth. How? By shifting into high gear when it comes to setting aside money for the down payment, monitoring your spending and keeping on top of your credit. END