Why You Should Put Twenty Percent Down

Katie Eckelman

Personal Banking Officer


Vehicles are a crucial part of our every day lives. They get us to work, the grocery store, allow us to visit friends and family, and bring your pet to the vet. The reasons why you need a vehicle are endless. So, when you look at purchasing a vehicle, you need to make sure you are making a wise, financial decision with your vehicle loan.

Why Twenty Percent?

Putting down 20 percent seems to be the magical number, but why? Vehicles are essential for majority of Americans, but they lose value very quickly. If you walk into a dealership and purchase a brand-new vehicle, the moment you drive it off the lot that vehicle is now worth 20% less than what you just bought it for.

When you put 20% down it allows you to have a lower interest rate, lower monthly payments, and typically it allows you to pay off your vehicle quicker. This can save you hundreds to even thousands of dollars on interest over the life of your loan.

This 20 percent down payment also ensures that you will not be upside down on your vehicle. Being upside down, on any loan, means you owe more on the loan that what that item is worth. This can affect your ability to trade in, refinancing your loan, or worse if you happen to be in a car accident where the vehicle is totaled you could potentially pay money out of pocket.


For example, your vehicle is worth $20,000 and your loan has a balance of $30,000. You get into a car accident and your car is now deemed totaled by your insurance company. The issue is that the insurance company will only give you your vehicle is valued at ($20,000) not what your loan is for ($30,000). This means you will now have to pay the bank $10,000 out of pocket to pay off your loan for a vehicle that is now in the junkyard.

Saving money, to put down on a vehicle, never sounds like a lot of fun! It is hard to wait to get that beautiful new vehicle, but it could save you a lot of headaches down the road. Speak with a banker to see what is right for you!

Ready To Get Started?

Excited to get that new vehicle? We’re ready to help you take the first step! Reach out to us through the form below or give us a call. One of our auto lenders will be in touch shortly.