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Is 20% down a good downpayment on a $35,000 vehicle?
My DTI is fine, no problems there. I expect my scores to be in the 680-700 range by the time I apply. The problem is my auto loan history isn't perfect. I paid off a $40,000 vehicle over 72 months but I had about 6 30 day lates over the course of the loan. That loan was paid off 2 years ago.
It won't matter in most cases unless you're doing the process a little backwards. Here's the steps you SHOULD be taking to make the down payment simply irrelavent:
1. Negotiate the price of the car to below or near invoice price. Don't negotiate down from MSRP. DO NOT negotiate monthly payments.
2. This really should be the first step, but it helps if you have information about the car ahead of time at times: Talk to different banks, particularly credit unions. Figure out what the best APR you can get from each bank/CU is. CUs are generally cheaper and more lenient. If you go to a bunch of banks within a 7 day period, all the credit reports look like one hard pull to the CRAs. You'll be fine, do all the research you need.
3. If they state that they require a down payment, which most of the time they shouldn't care, then keep that on hand. Inversely, if they tell you that they will approve you for $25,000 maximum at their rate, then keep the difference of the final sale price + TTL as cash on hand for the down payment. It's up to you to weigh if you want to go with CU #1 that will give you $35k at 5.49% or CU #2 that will give you 25k at 4.49%
4. Go in with the preapprovals if they give you any, but don't bother showing the sales reps or the finance guys. Use it as ammunition later.
5. Once the negotiations are done, which I will assume you did as step one, and you're in finance, they will run your credit (it won't ding you because you did all this within 7 days) and tell you what rate they got. Tell them you got approved for whatever rate you got from the lowest % CU/Bank, minus 1-2%, depending what the percent might be. This usually keeps them on their toes to try and beat their offer. If the CU hard capped you at a set amount, and the bank is willing to MATCH the 1-2%-less APR for the full loan amount, consider yourself lucky and that you've gotten a better offer from your 3 hours of research.
6a. If you want to go with their financing: After step 5, so long as they don't state that they require a down payment, the choice is up to you on how much you want to put down to help out with your monthly payment. Make sure that they give you amortized interest vs simple interest for the loan term as well. Don't pay for interest you shouldn't be paying for.
6b. If you want to go with your own financing/CU: Once the numbers are all lined up, have the preapproval in hand or have them contact the bank. There are different procedures between different CUs/banks, so I can't list them here, but the finance people usually knows what they're doing. Just be sure to have enough cash on hand and in loan to cover the full amount. So, if you have $17.5k in the bank with a 25k preapproval, that gives you $42,500 total, so if your final out the door cost is $37,500, write them a check for $12,500 (or have your CU do it, as they usally take all the money in one bundle and give it to the dealership.) Protip: Use a credit card that gives you points, if possible. They usually do accept this form of payment, as reluctant as they may be sometimes. A good identifier if the you got a good deal is if they are reluctant to take ANY form of credit card and complain about the fees, but some will do this just to rant. If they graciously take the credit card, you may not have gotten such a good deal after all. This varies from situation to situation. I personally have done it both ways.
I hope this helps! I know I gave the full process rather than just the short answer but I hope this helps you make the best decision and hopefully saves you some money. I know how they work, and I know what they will try. If your thought is "Will the down payment show up better on my credit report" the answer is no. They don't care. They only see the loan amount, not what the car is worth, not what the car sold for, just the loan amount.
As for your previous history, that can play into effect but if the lates were over 2 years ago, they should have fallen off. This will, however, effect your "car" score, which is different than the regular credit score.
In short, yes 20% is good for any car down payment. It will bring down your LTV and lenders like this. Some lenders may say no downpayment needed, but if you can afford it just do it. You will save money on interest.
To cap off what the guy said above me, yes negotiate your car price. But I'd still recommend the 20% down payment to get best credit terms and save money on interest.