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How much does a downpayment affect APR terms on an auto loan?

Regular Contributor

How much does a downpayment affect APR terms on an auto loan?

Im trying to figure out how much I need to save for a down-payment,

 

I will make about 30,000 this year.    I am looking to perchance a new car for 23k (after tax and everything)   I will not be buying a new car for a while but I figure I really need to start putting aside money for a large down payment since I hate getting large month bills.

 

I have about 2,700 set aside for a down-payment right now so I would need to finance about 20,300.  What kind an APR do you think I would get offered?

What if I save another 10,000 and then only needed to finance 10,300 ????  Would that greatly drop my APR ?

 

I have been putting away $200.00 every paycheck for a new car, but I dont really know much is 'enough' to get decent APR terms. 

 

Currently I have a total credit line of 12,000 on my credit cards.   I have 3 hard pulls on the last year on my credit report but it go down to 2 at the end of July.    My AAoA back in January was 4 years.  I have 4 student loans that are paid in full that are still on my credit report.      Below are the most current credit scores I have

 

I am a memeber of two credit unions, (Alliant Credit Union & Fort Know Federal CU)  and I plan on applying with them to see what kind of rate they offer me.

 

Thanks for any help you can give me.

MyFICO score- Equifax - 12.03.11 - 780 Experian 12.03.11 - 763
(FAKO Scores) EXP PLUS Score Dec 2011. 748
Advanced Risk Score 2.0 (NextGen) 793 Dec 2010
Vantage Score (2011) MAR = 771 Jun = 771 Sept= 788 Dec= 773
2012 MAR = 782 JUN=783 Dec = 789
2013 Mar-796 Jun-799 Dec- 797
Message 1 of 5
4 REPLIES
Moderator

Re: How much does a downpayment affect APR terms on an auto loan?

If you have any sort of positive auto history on your report, a larger downpayment will help you not at all assuming you're still at that gold-plated FICO level according to the Equifax report from here Smiley Happy.

 

I wouldn't worry about it anyway, downpayment is more for approvals at all and less about rate traditionally; in your case with a very pretty report even a 10% downpayment is going to be fine on that front, and one 5x that won't do much good at all in terms of reducing the loan APR.  We're talking a small fraction of a percent in your scenario, nearly absurdly trivial against the nice rate you're almost certainly qualified for.

 

 

Starting Score: EQ 5 561, TU 98 567, EX 2 599 (12/30/11)
Current Score: EQ 5 771, TU 4 758, EX 2 758, EQ 8 795, TU 8 762, EX 8 786 (7/28/17)
Goal Score:    EQ 5 750, TU 4 750, EX 2 750, EQ 8 800, TU 8 Blah, EX 8 800 (01/01/18)


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Message 2 of 5
Regular Contributor

Re: How much does a downpayment affect APR terms on an auto loan?

I have no Automotive payment history on my credit report.

 

Thanks for the info.   I hate large recurring monthly bills so I will keep savings for that larger down-payment.

MyFICO score- Equifax - 12.03.11 - 780 Experian 12.03.11 - 763
(FAKO Scores) EXP PLUS Score Dec 2011. 748
Advanced Risk Score 2.0 (NextGen) 793 Dec 2010
Vantage Score (2011) MAR = 771 Jun = 771 Sept= 788 Dec= 773
2012 MAR = 782 JUN=783 Dec = 789
2013 Mar-796 Jun-799 Dec- 797
Message 3 of 5
Established Member

Re: How much does a downpayment affect APR terms on an auto loan?

We just bought our car yesterday. I think your score would determine your interest rate and down payment would be more on whether get approval or not. They both kinda go hand on hand at the same time, i think.

Message 4 of 5
Frequent Contributor

Re: How much does a downpayment affect APR terms on an auto loan?

Your score will highly dictate your APR.

Your down payment can help you get a lower APR, but not much. The only way it can help a lot is by shortnening the finance term, for ie:

You finance 20k for 72 months at 10% (just using numbers here)

If you put the 10k down, you will only finance 10k, so you can finance at a lower term like 36 months a get a lower APR like 7%.

 

Whatever you qualify for, if you finance for a shorter term, your APR will be lower.

Message 5 of 5