Arranging Your Down Payment
Unless you received 100% financing from you bank, your auto loan will pay for most of the total price of the vehicle you're buying, but not all of it. You will be required to pay the difference in cash and that's called a "down payment."
The amount you'll be required to pay as a down payment depends on the selling price of the vehicle and on your credit worthiness. The dealership may ask you for as much as one-third of the total selling price, but that's often just a negotiating ploy. Unless you're a first-time buyer or you have risky credit, you should be OK (as a rough estimate) if you have about 10% of the selling price for your down payment.
Your down payment can be a combination of three sources:
That can include the money you earned from selling your present car.
2. Factory Rebates
If there is a rebate for the vehicle you're buying, that's free money to you and may count as part of your down payment (depending on the laws in your State).
3. Your Trade-In
If you trade your car in to the dealership, then the equity amount (the appraised wholesale value of your car minus the pay-off amount) can be included in your down payment.
If you are a first-time buyer or if you have questionable credit, you may be required to have a larger down payment, perhaps 15% to 20% of the selling price.
TIP: If you're having trouble coming up with enough cash for your down payment, a good trick is to buy a new car that has a rebate.
Finally, don't take out any loans from the dealerships to cover your down payment. You'll end up having to pay off two loans at the same time.
Now review the recap on the next page. Once you've accomplished all of the listed tasks, you can congratulate yourself. You've made a lot of important progress!
In the next and final step, you'll discover how to buy your car like an expert.
Be smart! Get a free price quote. Click here.
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