Do You Need a Down Payment to Buy a Car?
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.
Why Do Dealers Ask for Down Payment?
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:
- Lower monthly payments
- Less interest paid over time
- Easier loan approval
- Offsetting depreciation after you drive off the lot
Dealers ask for down payment because they know it will help the sale get finalized quicker and easier.
How Much Down Payment Do I Need?
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.
How to Buy a Car Without a Car Down Payment
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:
- Buying a less expensive car or a used vehicle: If the 20% down payment benchmark is out of reach, looking at a vehicle with a lower sticker price will bring down that initial cost.
- Trading in your current vehicle: Depending on what your car is worth, you may be able to bring down the cost of your new one.
- Asking someone you trust to be a co-signer: Having a co-signer or guarantor with a good credit history on your loan gives lenders extra peace of mind when extending financing.
- Waiting for manufacturer sales or deals: Most brands offer savings throughout the year, especially around major holidays such as Black Friday, Presidents’ Day, or the Fourth of July.
Secure Financing with Green Light Auto Credit Today!
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.
