What Are the Benefits of Putting a Down Payment on a Car?
Are you in the market for a new or used vehicle? If the answer is yes, chances are you have tossed around what your ideal financing options are. Once you have selected the vehicle that is right for you, you are going to want to have a plan in place on how you will pay for your vehicle. Luckily, you’ve got options! With as little as 500 down car lots like Drive Now can help you finance the car of your dreams. Below we discuss the benefits of putting money down on a vehicle and also offer some down payment tips.
First Up: Financing Criteria
When it comes to financing a vehicle, the credit decision is typically based off of four main criteria:
- Personal credit history
- The vehicle you are purchasing (make, model, price, mileage, etc.)
- Application information
- Your down payment
What Exactly is a Down Payment?
Before we plunge into the down payment, we should discuss just what a down payment is. When you finance a vehicle, a down payment is the amount of money or trade equity you pay up front. The amount of your down payment directly affects your future monthly payment amounts – typically, the more money you put down up front, the less you pay in increments. A down payment can also tend to lower your annual percentage rate, saving you money in the long run.
How Much to Put Down?
Now that we have covered the logistics of a down payment, how much of a down payment should you put down? The more you are able to put down, the better off you will be. As we covered earlier, the more you put down, the less your monthly payments will be. A larger down payment can also provide you with more favorable financing terms and a lower rate. No matter how much money you have to put down, any amount is going to save you money down the road. Even with 500 down car lots like Drive Now can help you find what you are looking for in your price range – it truly will pay off in the future. Utilize the internet to discover what your exact monthly payments will be with your down payment. Many sites provide you with a car payment calculator, so you can determine what your monthly obligations will be ahead of time.
Your down payment does not necessarily have to be a cash down payment. If you have a vehicle you can trade in, dealerships will give you cash credit for the vehicle’s worth. This credit is your down payment. You can double dip by trading in a vehicle and also putting cash down at the same time, which will maximize your down payment. Even though it’s beneficial to put as much money down as you can, you should ALWAYS stay within your means. If putting a large payment down is going to make your other monthly bills challenging to pay, don’t do it.
Drive Now is Arizona’s leading used car dealership when it comes to selection and price. We can help and guide you with any down payment questions you may have, as it’s our priority to keep you as a satisfied and happy customer. Stop by one of our Arizona dealerships today!