Is it just about that time that you need to be looking into buying a new car? Are you on the fence about whether it’s necessary to have a down payment in order to make the purchase? Nowadays, consumers have the option of choosing to put money down or opt for a no-money-down deal. While your financial circumstances will clearly help to determine what path you take, there are some other factors you should consider.

Here’s a look at the pros and cons of a down payment when buying a car.

How Much Do You Have to Put Down?

There is no set number on what you “have” to put down. Rather, it differs from dealership to dealership. Most dealers will leave it up to you, the consumer, to decide what you are comfortable with. In general, if you can afford to put down 20%, you will most likely be offered the best rates. Putting down a significant amount of money means the lender is taking less of a risk, so they can reward you with a lower interest rate.

Of course, 20% is an awful lot of money for most people, so aiming for 10% can be a more realistic plan. You’ll still get a decent rate, and this is considered the “normal” amount for a down payment.

The List of Pros

When it comes to the list of pros in putting down money for your vehicle purchase, there are a few big ones that stand out.

The biggest pro is, of course, the fact that you will owe less money on the car, which means you can either pay for it faster, or you can enjoy lower monthly payments. What this means is that you’ve got more of a cushion since your payments are lower. If you lose your job or you run into other financial difficulties, at least you were stretched to the limit on your car payment.

As mentioned above, a down payment also tends to lead to a much better interest rate, which over the course of the loan can result in some pretty significant savings. Why not keep the money in your pocket instead of giving it to the lender?

The List of Cons

One of the biggest cons has to do with your own buying habits. If you’re the type that likes to get a new car every couple of years, then it really doesn’t make sense to put money down on it. As well, if you can’t put down enough money to make a difference in the interest rate, then it doesn’t amount to anything in terms of savings.

How to Save for the Down Payment

As for car down payment tips in terms of how you can save the cash. Try to look for areas where you can spend less in your daily life and focus on putting money away on a weekly basis. Even if it’s only a small amount each week, it will still add up. If you own a vehicle that is already paid for, you can use it to get trade-in value or you can try selling it privately and then use that money as a down payment.

When it comes to down payments, the 10% rule is usually the best one to stick with. You’ll get a decent interest rate and it will make a difference in your monthly payments.