How Much Is a Car Down Payment?
Whether you've picked out your dream car or are still searching for "the one," you'll eventually need to think about paying for it. Part of that process includes making a down payment, which varies by a new or used car loan or lease.
Our team at Ira Toyota of Danvers created this guide, so you can know how much a car down payment is. Read through the information below and contact us when you're ready to get a new ride near Danvers, Peabody, or Salem.
Car Down Payment for a Loan
If you're buying a new Toyota, it's recommended to put down 20% of the total cost. If it's a used car, it's suggested to put down 10%.
Putting money down on a car will help you avoid an "upside down" or "underwater" situation, which is when you make too small of a down payment and end up owing more than what the car is worth. Being in this predicament could result in one of two scenarios:
- You may not be able to trade in your current ride for a new one.
- You may have to roll the amount you still owe onto a loan for a new car.
If you don't put any money down, the vehicle is immediately worth less than the loan you've taken out-and that's why you'll want to put as much down as possible to avoid this situation.
Down Payment for a Lease
A down payment for a lease, on the other hand, is usually determined ahead of time. With a lease, you'll want to stick to the required cash due rather than putting down as much as possible since the purpose of a lease is to minimize a lessee's cash out. If you pay more at signing, you'll be doing the opposite of a lease's intention.
Benefits of a Down Payment
There are many benefits to putting some money down when you buy a car. For one, you may get better terms on an auto loan, including a lower interest rate. With a
Plus, you may be able to shorten your loan term or lower monthly payments. Along with a lower interest rate, this could be done for new or used car loans. With any of these factors, you could pay the loan off faster, so you can officially own the vehicle. Or, as we mentioned above, you'd have an easier time selling or trading your car in down the line.
In addition, it provides a financing company with money right from the beginning, which means they'll have a portion of the loan before you even make your first monthly payment. As a result, this can offset the immediate depreciation that occurs with new vehicles.
Start Shopping for a New or Used Car Today!
Now that you know how much a car down payment is, it's time to get yourself an impressive automobile. Contact us at Ira Toyota of Danvers, and we'll help you pick out a new or used Toyota. We'll help guide you through the entire buying process, including the matter of making a down payment.
Don't wait. Find your new ride near Danvers, Peabody, or Salem today!