How Much Should Your New Vehicle Down Payment Be?
When purchasing a new vehicle, it’s natural for vehicle shoppers to have questions. Some vehicle shoppers may want to know: How large should they make their down payment on a new vehicle? To answer this question, we’ve broken down everything drivers need to know about vehicle down payments.
Why Is a Vehicle Down Payment Important?
Drivers need to take care when deciding how much money they want to put down for a new vehicle purchase. The higher a driver’s down payment on their new vehicle purchase, the lower the interest rate will be, as lenders will view the agreement as less risky than drivers who put down little money for their purchase. Similarly, the higher the down payment, the lower the monthly payments.
How Much Should You Put Down for a Vehicle Purchase?
If purchasing a new vehicle, it’s recommended for drivers to put down at least 20% of the vehicle’s price for their down payment. If the vehicle is used, this percentage goes down to 10%. If the driver is not in a financial situation that makes these recommended payment amounts possible, they should strive to make a down payment as close as they can afford to these amounts.
What Can Offset a Low Down Payment?
Fortunately, drivers who can’t make a large down payment on their vehicle can offset the risk of increased interest rates in several ways. By having a high credit score, a detailed history of previous auto loan payments, or a good income-to-debt ratio, drivers can afford to make a lower down payment, without having to worry about their interest rate being high.
Shop for Your Next Vehicle at Southbank Dodge
In the market for a new or pre-owned vehicle? Southbank Dodge in Ottawa, Ontario has a large selection of vehicles for drivers to choose from. Vehicle shoppers can explore our new and pre-owned inventories right here on our website.