What is a Good Down Payment on a Car?
While a driver’s credit score is the most influential factor in determining a car loan’s terms, the amount chosen for the down payment can also play an important role. At Auto Depot Sudbury, we often hear vehicle shoppers ask: What is a good down payment on a car? Below, we’ve broken down everything drivers need to know about down payments, and how large they should be.
Why Does My Down Payment Matter?
Generally, the more money a driver puts down on a vehicle purchase, the lower the interest rate will be on the accompanying car loan. Larger down payments are a good sign to lenders that the driver is a low-risk borrower, giving drivers access to financing options with lower interest rates.
How Much Should My Down Payment Be?
Drivers often hear that they should make as large of a down payment as they possibly can when purchasing a new vehicle. However, as every driver’s personal financial situation is different, this advice may come across to some as impractical. Fortunately, there are more specific guidelines for drivers who are looking to make a down payment.
Typically, automotive finance specialists recommend that vehicle shoppers should make their down payment at least 20% of the vehicle’s purchase price. If shopping for a used model, this percentage goes down to 10%. Drivers should keep in mind that these recommended amounts can include the value of a trade-in vehicle, in addition to cash.
Is It Okay to Purchase a Vehicle with a Low Down Payment?
While not ideal, drivers who are unable to or are reluctant to put down the recommended minimum amount for a down payment can still feel confident in their vehicle purchase, with the right financial planning. As long as a driver is able to make their monthly payments, they’ll have no difficulty buying a vehicle with a low down payment. However, drivers who go this route will likely end up owing more in the long run, as their interest rates will be higher.
Auto Depot Sudbury, located at 933 Kingsway, is the perfect play for Sudbury drivers to shop for pre-owned vehicles. Wondering what makes and models we currently have in stock? Don’t hesitate to explore our online inventory. Our team of automotive experts are always available to assist you. Reach out to us online, or by giving us a call at (705) 673 – 6079.