How much should my used car down payment be?
There are not many people who can walk into a car dealership and buy a vehicle with cash. It simply isn’t a reasonable expectation. However, that means that Carizma Motors customers will need to obtain some kind of help financing their vehicle purchase. If you’re in the market for a pre-owned vehicle, but you might be in a tight financial situation, you might be wondering, ‘How much should my used car down payment be?’ According to the automotive experts at Edmunds.com, people looking to financing a used car, truck or SUV should aim to put down at least 10 percent of the purchase price when they’re working on getting a loan. Our product expert team works with people who might be in a less-than-perfect credit situation. Let’s take a look at a few things you might need to know.
READ MORE: How do I get my car ready for winter?
Buying a Car with a Bad Credit Score
According to financial experts, people with a FICO score of below 620 will likely be in danger of having trouble getting financing for a vehicle. This does not mean that there is no path to buying a vehicle, but things could get expensive on the back end of the deal.
When someone applies for a loan at a bank or credit union, that institution views the entire transaction as mitigating risk – they want to get their money back. A borrower with a low credit score can make things easier on themselves by putting down more money to start.
Why should I make a big down payment?
When a borrower is putting together a down payment, there are three elements they are working to make easier on themselves. First, is the cost of the financing which we covered above – a larger down payment will reduce the amount of money a person is borrowing which will save them money on interest.
Additionally, a larger down payment will likely result in a lower monthly payment and it will offset the depreciation in the vehicle’s value that is just an avoidable reality in buying cars.
If you have any questions about the best way to finance a vehicle purchase for your given situation, make an appointment with a Carizma Motors product expert today.