Putting money down when purchasing a used car has many financial benefits for Wisconsin drivers shopping at dealers like Easton Motors. Read on to learn more about how down payments can lower your monthly payments, interest charges, and get you better loan terms when buying your next used car, truck or SUV.
A down payment reduces the amount you need to borrow from a lender for your used car. When you borrow less money, your monthly car loan payment decreases. For example, a $5,000 down payment on a $15,000 used car means you only need to finance $10,000. That results in lower monthly payments versus financing the full $15,000 without a down payment.
Down payments give you instant equity in your next used car. Equity refers to how much of the vehicle you actually own. Large down payments mean you own a bigger portion of the car right off the bat. This protects you if the car quickly loses value, as you have more equity acting as a buffer against depreciation.
When you finance less money, you pay less interest to the lender over the life of the used car loan. A down payment of just 10-20% can save you hundreds. Putting down more upfront saves you even more in interest payments down the road.
Some lenders offer lower interest rates to buyers who make sizeable down payments. It shows them you can handle money responsibly. Even a few percent lower interest thanks to a down payment saves you significantly over the loan term.
Financial experts suggest a 20% down payment when possible. On a $15,000 used car, that would be $3,000 down. While 20% is ideal, 10-15% down is still beneficial. Calculate what you can afford. Any down payment helps lower your monthly payment and interest charges.
Your down payment can include:
- Cash savings
- Value of your trade-in
- Rebates you qualify for
- Cash gifts from family/friends
Combine these funding sources to make a sizeable down payment. It shows lenders you're serious and gets you the best used car loan terms.
While zero-down offers may be tempting, they cost you more in the long run with higher payments and interest. Aim to put at least 10% down on your next used car, truck or SUV. The Easton Motors finance team helps explain down payment options to set you up for used car buying success.
Down payments give Wisconsin used car shoppers financial advantages. At Easton Motors in Green Bay, Sun Prairie, Wausau, Adams, Baraboo and West Salem, our goal is helping you drive away happy and confident in your purchase. At Easton Motors, buying a vehicle is as EZ as 1, 2, 3!