Budgeting for a new car takes careful planning, and while adding up your expenses, you may be asking yourself, “do you need a down payment to buy a car?” The answer is not black and white: while you don’t need a down payment to buy a car, it definitely helps you save money in the long run, with lower monthly payments and a potentially lower interest rate. Green Light Auto Credit digs into why dealers ask for a down payment and other car down payment tips.
Down payments make it easier for buyers to secure financing. Whether you’re buying a car, a house, or making any other major investment, down payments show lenders that you are a responsible borrower and less of a risk. While you can borrow without one, you need a down payment to secure the following benefits:
Dealers ask for down payment because they know it will help the sale get finalized quicker and easier.
Not sure how much your down payment should be? The general rule of thumb is 10-20% of the car’s value, but what’s more important is making a down payment that’s within your financial reach. Overextending yourself is never a good way to go into a new financial arrangement, so be sure to calculate what you can truly afford.
If you need to buy a car but can’t afford a down payment, there are other ways to protect yourself while still bringing home a new set of wheels. Consider:
For help buying a car with or without a car down payment, turn to Green Light Auto Credit! Our experienced and friendly financial team is here to answer all your questions and point you in the right direction for your financial situation. Contact us to get started today.