When purchasing a car, you have the option to buy the car outright, obtain financing from your bank or obtain financing at the dealership. A down payment is money paid upfront to a dealership and serves as a way to lessen the impact of a car loan by lowering your monthly payments. Because a down payment reduces the amount of money you need to borrow, your interest rate on a loan may be less than it would be if you didn't make a down payment. The down payment is made at the dealership.

Step 1

Decide if you want to lease or finance the car. Down payments are typically required and almost always advised when financing a car, but rarely required and almost never advised when leasing a car.

Step 2

Determine the maximum down payment you can make. Edmunds.com explains that a 20 percent down payment is ideal because the down payment pays off the car's first year deprecation. However, if making a 20 percent down payment will put a strain on your finances, make a lesser down payment, such as 15 or 10 percent. You can make a down payment of more than 20 percent, if you wish.

Step 3

Obtain financing and provide the dealer with the down payment. Most car dealerships accept down payments in the form of cash, checks or debit cards. If a dealership accepts a debit card as payment, then credit cards are also usually accepted. Unless you can pay it off immediately, you should avoid making a down payment on a credit card.