Wait! Before you sign that dotted line, let's talk about down payments. For years, you've probably heard about the magical 20% as the optimal amount of cash to put down on your new car. However, for most people 20% is unrealistic, and zero down doesn't put them in a great financial position. In fact, according to Edmunds, most people today put down around 10% when buying a car.

Instead of shooting for a percentage, make your goal to find a sweet spot that keeps you from getting upside down but doesn't deplete all of your savings. 

Here are 5 reasons to make a good down payment.

1. Greater chance of getting loan approval: Banks are more likely to approve loans for borrowers who have a FICO score of less than 670 if they make a down payment of 15% or more. 
    
2. Better loan and lower interest rate: A larger down payment indicates to lenders that the borrower is lower risk.
    
3. Increase equity in the car: Cars depreciate the most in the first year. Down payments are a great way to offset some of this depreciation.
    
4. Lower monthly payments: A good rule of thumb to keep in mind is for every $1,000 you put down, your monthly payment will go down about $20.
    
5. Keep your overall debt lower: Who doesn't want to have less debt? Besides that, getting upside down on a loan is even worse.

As you can see, in general, larger down payments are usually better. On the other side, if you have good credit and get a low rate (near zero percent), you may want to keep your cash in the bank for reserves. 

The best option is that gives you the car you want and doesn't burden your financial position.