So, you’re ready to purchase a vehicle. Now that you’ve made the decision, you are also probably thinking about getting a car loan to help finance your purchase. Like many others, you may be wondering if a down payment is really necessary. We say it is! Here are several reasons why putting cash down will benefit your car loan payments.
Your Car Depreciates In Value Immediately
To be frank, vehicles are not a great investment. Unlike property, they actually lose their value. Which means the second you drive off that lot, your car has already lost a substantial amount of its worth. So, that car loan is already for more than the actual cost of your vehicle. Paying off any portion as a down payment means you’re less in the red for that car loan you owe. Plus, you can have the option of a shorter loan term and lower payments. Bonus!
You’re Car Loan Is For More Than Just The Vehicle
It may sound great to get that vehicle with no money down. However, when it comes to car loans, it’s important to remember that amount you’re borrowing is for more than just the vehicle itself. You’re also paying for interest, taxes, and any other additional fees. So, it makes sense to pay off as much of that car loan upfront as possible so you don’t get stuck paying for more than what it’s worth in the long run.
Interest Adds Up Over Time
Speaking of interest, it behooves you to keep in mind that the longer you stretch out that car loan, the more you end up paying. This is because interest adds that extra percentage to the amount you borrow. So, if your car loan amount is lower (because of that down payment), you’ll also have less interest to pay. You could also think of it another way. That down payment not only pays off part of that loan interest-free, it also reduces the amount that does have interest. And if your rates are high, this is a definite plus.
No Credit or Bad Credit= High-Interest Rates
If you face the challenge of having no credit or bad credit, your car loan will probably come with a hefty interest rate to top things off. In addition, getting approved for a “no money down” option may not be within your reach. So, making sure to have some funds set aside for a down payment can help you succeed in getting that car loan.
What Our Company Can Do For You
We highly encourage our customers to put as much money down on their car loan as possible. While this part is up to you in the end, we can certainly help when it comes to applying for car loans. We offer the best services and the most competitive interest rates. With our partners at BlueSky Auto Finance, you’re in the driver’s seat. Apply with us today to get started towards that new car purchase.