How Your Down Payment Affects Your Car Loan
The Power of Car Loan Down Payments
Down payments might sound like money down the drain—after all, you’re paying more when you don’t have to. However, you might be surprised to know that there are plenty of ways they can work for you. Although Davey Auto Sales doesn’t require down payments on our range of vehicles, we definitely recommend making one if you’re in the financial position to when taking out a loan. Let’s take a look at some of the top ways in which your down payment can affect your car loan and financing options. If you have questions about down payments or want to consider making one yourself, our financial specialists are only a form away. Alternatively, why not take out a loan for your vehicle with us today?
READ MORE: Arriving With A Loan Pre-Approval Has a Lot of Upsides
Improve Your Chances of Loan Approval
By offering a solid down payment, you make a strong first impression by demonstrating financial security and the ability to save money and repay your loan. As a result, your dealership is sure to feel confident that you will commit to your repayments and you give yourself the best chance possible of signing that all-important contract.
Lower Your Total Loan Amount (and Your Monthly Payments, Too!)
Putting money down from the start decreases the total amount you owe on the vehicle you’re paying for. Not only that, but you cut down your interest and monthly payments as well. Wondering how? It’s simple: a smaller total to strive for overall means less accrued interest, smaller repayments, and more money in your pocket at the end of each month. Now that’s a good deal!
Less Time, Less Loan Interest
A good down payment can reduce your interest rate by shortening the time for which you’re borrowing, especially if you’re making additional payments whenever possible. Even considering just the one-time down payment, though, you give yourself a head start on your repayments and deplete your total faster than if you hadn’t put money down. Overall, the faster you can pay off your loan, the faster you don’t have to worry about repayments or interest anymore–a goal for which an upfront down payment can lay a sturdy foundation.
No Negative Equity
There’s another reason why it’s wise to pay off your loan as soon as possible, and that’s the risk of negative equity. In terms of car sales, this describes a situation in which a loan takes so long to pay off that your car ends up worth less than the amount you still owe on it. A good way to avoid this is with a down payment, so you can still feel content with your choice of car even once your loan is paid in full.
Thinking of making a down payment on your loan? It’s wise to make sure you put down the right amount for your purposes. Our team of friendly and compassionate finance specialists are ready to help, so why not reach out today to discuss your loan? Alternatively, get started with a loan today and get pre-approved within hours!