Whether you plan to finance or lease a vehicle, you should investigate the advantages of putting money down on a car and how much you'll need for a down payment.
On average, a person keeps the same vehicle for seven years. Most buyers opt for a car loan. However, your lender may require a down payment before extending an auto loan. Therefore, how much do you need for a down payment? This is a question you should answer prior to beginning car shopping if you plan to purchase a vehicle in the near future.
Is a Down Payment Necessary on a car, SUV or Ford truck purchase?
The short answer is no. Some lenders may not require all consumers to make a down payment. Of course, this is impacted by your credit score and other factors. If you have excellent credit, a down payment may not be required, but with a lower credit score, it is likely you’ll have to put a deposit down. Of course, much of this depends on the cost of the vehicle.
Don’t forget about your Trade-In (Hint: it can be your down payment)
The majority of car buyers are likely trading in a vehicle. This trade can serve as your down payment and may be enough that you don’t have to put any additional cash down. It all depends on the cost of the vehicle you are buying. It’s a good idea to apply for financing online to determine whether a lender approves your loan and how much of a down payment may be required. That way, you’ll know exactly how much car you can afford and what models are within your budget.
What are the advantages of making a down payment? Why should I put money down on a car if I don’t have to?
That’s a fair question. Who wants to spend money up front when they don’t have to? But here’s why it is a good idea:
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Better Loan Terms - Putting money down reduces the lender's risk, so putting more money down will likely result in a lower interest rate.
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Value of the Vehicle - Your down payment reduces the loan balance, thereby increasing your equity in the vehicle.
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Lower monthly payments - putting more down up front reduces your monthly costs. Also, it is possible to have a shorter loan time. Perhaps 5 years instead of 6.
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Increased Chances of Eligibility for a Loan – If you think you may not be approved for a loan, a down payment can certainly increase your chances.
How much money should I put down on a car purchase in 2023?
So, what is the proper quantity for a car down payment? It will truly vary on each individual's situation, however, traditionally experts have suggested 10% or 20%. A 10% down payment is typically sufficient when purchasing a used vehicle. You should strive for a 20% down payment when purchasing a new car. If you purchase a used Ford for $25,000, you should strive to put down $2,500. Alternatively, if you pay $50,000 for a new car, you may wish to set down $10,000.
Obviously, you are not required to place these amounts down when purchasing a car. You can instead offer a smaller down payment and see if the lender accepts your loan application. Additionally, you can purchase a less expensive vehicle. For instance, if making a 10% down payment is important to you, but you only have $1,500, you might consider purchasing a used car that costs around $15,000 or slightly more.
Also, remember that your trade-in serves as your down payment. Therefore, trading in a vehicle reduces the amount of cash that could be required for the new vehicle's down payment.
Purchasing a Car Today in the Macon area
You may qualify for an auto loan without a down payment. We encourage you to find out what you qualify for online before you begin shopping.
Come to Butler Ford in Milledgeville, Georgia. We offer both new and used vehicles and can assist you in selecting the ideal car, truck or SUV for you. Additionally, we offer financing options to qualified buyers, so visit us today to discover your next vehicle.