Putting a Down Payment on a Used Car: What You Should Know

Browsing for used cars can be an exciting venture. Learning about different makes and models can make you a savvy shopper, but the most important factor in making a purchase is how you plan to pay for your vehicle. If you are saving up a down payment before you buy, we would like to offer you some tips and advice about down payments and how to use them to your best advantage.

Lower Financed Cost  

If you do not have a down payment saved up before you buy, you may want to consider waiting until you can come up with it, if possible. Buying a used car with no down payment means a larger total the lender or dealership must finance to you. Even if you can offer $1,000 as a down payment, this can lower the total cost of the vehicle overall.

Calculating a Down Payment  

A dealership may let you know how much they require as a down payment on any of their used cars, or they may ask what you have to offer. A down payment can come in the form of cash or a trade in. However, if you plan to trade in your old vehicle, you might want to know its value first. Typically, you should plan to pay at least ten to fifteen percent of a car's total cost as a down payment.

A Down Payment May Affect Interest Costs 

Being able to offer a down payment on a pre-owned vehicle may result in a better interest rate. The more you can offer, the more flexible the lender may be when it comes to finding you a competitive rate. You may want to ask your lender or dealership about their interest offers and how much of a down payment is required for you to get the best rates.

The financial end of car shopping can be puzzling. However, understanding how a down payment can affect the monthly payment cost and the interest rates on used cars may help you find a great deal on your next vehicle.

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