 TITLE: How to Get Your Credit Ready to Buy a Car CONTENT: 6\\. Save Up for a Down Payment\n------------------------------\nA down payment is money you put toward the purchase when you're financing a car. You'll typically need to make a down payment of at least 10% of the purchase price. If you're financing a car that costs $25,000, for example, you'd need to save up $2,500 for the down payment.\nA larger down payment reduces the amount you'll have to borrow, which helps you save money over the life of the loan in several ways. Even if you expect to qualify for excellent lending terms, there are some good reasons to save up for a down payment of at least 10% or better yet, 20%.\n*   **Lower interest rate**: A higher down payment reduces the amount you'll have to borrow, which reduces risk to the lender. They'll typically translate that into a lower interest rate on the loan, which decreases the total amount you'll pay for the car by driving down interest costs.\n*   **Lower monthly payments**: With a smaller loan amount and lower interest rate, your monthly payments will be less than they would have been otherwise. This means you'll have more room in your budget to put toward other goals, such as buying a house.\n*   **Less risk of going \"upside down\" on the loan**: Cars generally lose a portion of their value in the first year. By making a large down payment (in the neighborhood of 20%), you cut down the risk that you'll end up owing more than the car is worth, which can cause problems if the car is totaled in an accident or you want to sell it before it's paid off.\nSaving up for a down payment isn't technically a way to improve your credit score. However, if your credit isn't stellar, a larger down payment might persuade a hesitant lender to approve your loan application or offer you better terms on a loan. END