How to Save Up for a Car Payments?

Buying a car can be one of the biggest purchases you’ll make—and it can seem complicated if you don’t already know about finance terminology. If you don’t know what subprime means, or what a deductible is, you might not know where to begin when trying to save for a car down payment or your monthly note. Luckily, you’ve come to the right place! At Fabre Automotive, we’re committed to helping you save up for, and then affording, your next car—whatever that may be!

Read on for some of our best tips for buying a car from Fabre Automotive. We’ll cover everything from how down payments affect the buying process, to how to save up for one, below.

The Basics of Automotive down Payments

Put simply, an automotive down payment is the amount of money you give the dealership the day you buy the car. If you buy a car for $20,000, for example, and give the dealer $5,000 before you leave—that $5,000 is the down payment. The other $15,000 (plus interest) will be paid down over time in your monthly payments over the period of your loan—generally 5 to 7 years.

The bigger your down payment, the bigger the benefit to you. There are a number of reasons you want to make the biggest down payment possible when buying a car:

• Lower monthly payments
• Shorter loan terms, meaning you’ll have to make payments for less time
• Less interest paid over the course of your loan
• More offset of the car’s initial depreciation

Basically, if you can afford a down payment, do it—you’ll spend more now, but you’ll save much more later.

Do I Have to Make a down Payment on My Car?

The short answer is, it depends.

The slightly longer answer is that most dealerships and loan institutions require at least some money down in order to sell you a car. There are some that don’t, but they generally require a good credit score. The down payment you’ll need to provide will depend on a few factors:

• Your overall credit score
• Your yearly income
• How old you are
• The size of the loan you’re trying to take out

While there are instances where you can you can forego a down payment, you can start off the loan immediately owing more than the vehicle is worth. This situation is called negative equity or “being upside down” on your car loan. It can be hard to dig yourself out of this kind of debt—so saving up for a down payment will pay off in the long run.

How Much down Payment Do I Need?

There are a few key factors to consider when saving up for a car down payment:

• Overall sticker price: Research the car you want on sites like Kelley Blue Book to determine the industry standard price
• Budget a bit extra: Try to save up a bit more than you strictly need in order to pay for the extra expenses like sales tax, dealership fees, licensing, registration, insurance, and others
• Save a good percentage of the car’s value: While in the past, the conventional wisdom was that a down payment should be about 20% of a car’s value, the average down payment in 2019 was 11.7%. Ultimately, you should save up as much as you can without leaving yourself broke after spending the money.

Sell or Trade Your Old Ride for a New Car from Fabre Automotive!

Whatever car you’re looking for, you can find it at a Fabre Automotive Louisiana dealership! We have plenty of high-quality cars at our dealerships, and our friendly sales people are here to help you find what you’re looking for.

When you’re ready to make that down payment, our finance team is standing by to help you get the best deal possible on a new or used car! Come see us or shop online today!