Benefits Of Making a Down Payment On Your Car
A down payment is a sum of money you can put towards the purchase price of a vehicle when financing. Down payments are a percentage of the cost of the vehicle and can be paid through cash, a used car trade-in, or both. Many lenders prefer down payments as it shows the buyer’s commitment to the vehicle and monthly payments. Here we have outlined some of the significant benefits of making a down payment:
Lower Monthly Payments
Putting down any sum of money when financing a vehicle can significantly lower your monthly payments, making it easier on your budget to pay off your loan.
Reduced Interest Rates
When you borrow less, you pay less interest. You will save more on interest by putting down a significant down payment, and some lenders may even give you a better rate.
Can Help with Loan Approvals
It may be challenging to get approved if you have a low credit score. However, a down payment proves to lenders that you are trustworthy and committed to the vehicle you are financing. Paying some cash upfront will increase acceptance rates, giving you more freedom to choose the best plans for your budgeting wants and needs.
Depreciation is the rate at which vehicles lose their value. New cars have a high depreciation rate, while used cars depreciate much slower. By putting down a significant payment upfront, you can offset the depreciation rate and avoid being “upside down” or owing more than your vehicle is worth.
Contact us at Taz Loans if you have any questions about down payments or if you want to learn more about our auto loans and plans. We can’t wait to hear from you!