Based on your credit is the real factor that determines if you need to put a down payment on a vehicle you are about to finance. If you have excellent credit then you can probably finance the whole amount of the vehicle with $0 down payment. If you credit is not that good then you will be required to put a down payment. Also the year, make, model and miles effect how much you should put down on the loan.
So what you need to put as a down payment is based on your credit and the vehicle you are buying. In most situations we at Air Flash MLS recommend you put a down payment on the vehicle that you are serious about buying. It shows to the bank or lender and dealership that you are a serious customer and accepting the responsibility to have a loan and will make payments on time. Some times people may have good credit and make not take a loan as a serious responsibly if they have no money invested in the loan. Also it tells dealerships you might be a risk and fraud situation, if all information is not matching.
Also putting a down payment will help you owe less to the bank. As time goes by all vehicles depreciate, which means that you might end up owing more than you finance. So the more down payment you put on your loan, the more you will not be negative or upside down on your car when it comes time to trade in. What negative and upside down means is the balance of what you owe minus what the dealership is giving you for your car. So for example let’s say your payoff to the bank is $15,000.00 and the dealership is giving you $8,000.00 for your trade the negative balance is $7,000.00, which you are responsible for and usually goes into the new loan for the new car, which means the negative will still follow you.
From experience working in a dealership without a down payment we would not do the deal because it seems to risky, this way it protects the customer, the dealership and the bank.
If you have bad credit then a bank will require a certain amount of down payment, which is the same concept as mentioned above, they see it as a risk and if you cannot pay the loan the bank will take a loss because you will owe more than one the car is worth and the bank will try to be in a equitable position if the loan goes bad.