How Does Down Payment Size Affect Your Auto Loan?
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What is a Down Payment on a Car Loan?
How Much of a Down Payment Should You Make on a Car?
How much you can comfortably put down Whether you’re buying a new car or a used one What programs the lender is offering What your credit score is
Benefits of a Bigger Down Payment
Streamlines Loan Approvals
Lowers Monthly Payments
Reduces Interest Paid Back
No down payment: $35,000 loan amount / 4% / 60 months: $3,675 in interest $5,000 down payment (14.29%): $30,000 loan amount / 4% / 60 months: $3,150 in interest $10,000 down payment (28.57%): 25,000 loan amount / 4% / 60 months: $2,625 in interest
Gets Ahead of Depreciation
What If You’re Unable to Make a Down Payment?
Buying gap insurance: If your vehicle gets totaled, this kind of insurance will help you fill in the gap between what you’re given by your insurance company and what you still owe the lender. Buying new car replacement coverage: In this case, if the vehicle gets totaled, you’d get a replacement vehicle. In some cases, this may already be part of your car insurance policy. Choosing a less expensive vehicle: With a lower payment, you might be able to free up cash for a down payment.
How to Save for a Down Payment
Come up with a goal. Figure out how much money you’d like to put down on a car purchase. Then assess how much you think you can put toward it each month. Start a budget. If you don’t have one already, this can be a useful tool to help you track and control the money going in and out. Start a special down payment account. This can make it easier to keep the funds separate from your other money and see them growing. Reduce spending. Get rid of unused memberships or redundant subscriptions, for example. And try to avoid large purchases, at least until after you have your down payment in hand.
Used Car Vs. New Car Down Payments
Frequently Asked Questions
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