Buying a new car is an investment that has to last for years, if not a decade, for most drivers. Monthly payments can be a strain and, as a result, many drivers choose to make a larger down payment to help reduce the amount borrowed. Still, other drivers put down a small amount of money and deal with higher monthly payments. How much should your down payment be?
A lender uses a down payment to help offset the cost of the car and effectively reduce the risk they take when helping a borrower finance their new ride. The larger the down payment, the less risk the lender takes. A larger down payment also indicates that the borrower is more likely to pay off the entirety of the loan.
As for what the right down payment is, many dealerships have a minimum requirement that varies from brand to brand and model to model. As a general rule, a buyer should put up at least 10% of the car’s value as a down payment. If a borrower has low credit, a 20% down payment will be more enticing to lenders.
Before you make a down payment, take in any rebates, trade-in vehicles, and other incentives into account! Do you have any additional questions? Don't hesistate to stop by the Riverhead Nissan Finance Department. We're happy to help in any way that we can!