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Car shoppers spend only about half of what is recommended for a down payment when they buy a new car. American consumers made an 11 percent down payment on average for the new cars they purchased in 2011, according to a new report by Edmunds.com. A 20 percent down payment is generally considered the minimum amount to ensure buyers aren't upside down in their new car loan.
In 2011, the average American car buyer made a down payment of $3,263 on a new car that cost an average of $29,509, the report found. Car buyers in California made the largest down payments, $5,139 on average or 17.8 percent, while buyers in Mississippi made the lowest down payments of $2,152 or 6.8 percent on average. According to the report, the states where buyers made the biggest down payments on new cars were (in numeric order) California, Idaho, North Dakota, Colorado and Montana, while the five states with the lowest were Mississippi, Oklahoma, Arkansas, Maine and West Virginia.
Worried about being upside down in your car loan? Here are 5 tips to help you avoid it.
Tara Baukus Mello writes the cars blog as well as the weekly Driving for Dollars column, providing both practical financial advice for consumers as well as insight into the latest developments in the automotive world. Follow her on Facebook here or on Twitter @SheDrives.
An exception to this is the promotional 0% financing some car makers offer. If you can get this, there's no reason to put any money down. If you would have put $5,000 down to avoid being upside down, keep the $5,000 in your savings account earning interest - if you need it for car-related reasons, you'll have it.