You’ve chosen the perfect vehicle, and now all that’s standing in the way is the small matter of payment. If you’re financing a new or used vehicle, the issue of down payments will arise. But just like many aspects of selecting a vehicle, down payments can be complex! Is a down payment necessary? How much will it be? And how is this amount calculated? Here are a few things you should know about down payments before you drive off in your new or used car or truck.
While it was once true that the typical down payment for a new vehicle hovered somewhere around 20%, that is simply not the case now. Many factors will determine which is the right down payment for you and the vehicle you’ve got your eye on. These days, many drivers are putting forth no more than a 10% down payment to purchase their dream car, while others offer a down payment of somewhere in the middle. You’ll need to ask yourself several questions before finding the magic number.
What down payment can you afford?
A down payment of 20% may be impossible with your current income. That’s OK. Dealerships offer a wide range of finance options to make sure you don’t sign up for more than you can handle. Payne is one of them! Contact our finance department for more info.
Will you purchase GAP Insurance?
If you’ll be purchasing GAP insurance for your new vehicle, you can probably get away with a down payment of about 10%. This is because GAP insurance will cover the cost of your vehicle should it be totaled. Car insurance is a whole other ball game, so you’ll want to consult closely with your dealership’s finance department about this issue.
What is Zero Down?
Got good credit? You may be in for a pleasant surprise with zero down. This means that you’re not obligated to give a down payment. A couple of drawbacks to this include higher monthly payments and probably, higher finance charges. You won’t have to save up for months, though, meaning you’ll get your new car sooner than expected. If you do go down the Zero Down route, consider GAP insurance to cover the difference. This is a great option for first time buyers!
Ready to take a new vehicle for a spin? Visit your local Ed Payne auto dealership to view our wide selection of new and used models! Or if you need service on your current vehicle, call us to schedule an appointment!