Find Out How Much Down Payment On A Car You Really Need

One of the questions most commonly asked by car shoppers is how much down payment on a car is necessary to get a good deal. Request your free no obligation to buy new car price quote and find out what deals are available from dealerships in your area today!

Tips for Lower Car Down Payments

Not all car buyers are able or willing to put a 20 percent down payment on a car. Putting less than that amount down doesn't necessarily mean that you'll end up upside down. There are a few ways to reduce your down payment and still avoid owing more than your car is worth.

Your first option is to make higher monthly payments. By doing so, you will build equity more quickly, which protects you in case the vehicle is stolen or totaled. An added benefit is that you'll pay off the car quicker this way.

It's important that you maintain your focus on the long-term goal; owning the car outright. If you pay off the car before you trade it in for a new one, you won't have to deal with the hassles that come with a minimal down payment. That peace of mind can mean never having to worry about being upside-down again.

3 Cheap New Cars

Nowadays, you don't have to spend a lot to get a high quality new car. Below are three examples of cars that deliver more bang for your buck. Remember, you can request your free quotes from dealers in your area and see what deals are available in your area! NCP

Chevrolet Spark LS
The Chevrolet Spark delivers fun styling and eye-catching colors which you may not expect from its low price tag. It offers standard features such as air conditioning, power windows, and alloy wheels which are reminiscent of the higher priced models. The cheap and colorful Spark is fun to drive on busy city streets, and its small size makes it easy to park for added advantage.

Mitsubishi Mirage
The Mitsubishi Mirage comes standard with a host of features such as power windows, mirrors and locks, A/C with temperature control, and an up-to-date stereo. It also offers one of the most fuel-efficient engines in its price range. Its 3-cylinder engine gets 34 MPG for city driving and 42 on the highway, putting it close to diesel and hybrid models. It was designed to make repairs easy, resulting in lower insurance costs, and comes with an exceptional bumper-to-bumper warranty for 5 years or 60,000 miles (10 years/10,000 miles for the power train).

Kia Rio LX
One of the downsides of buying a cheap car is that it looks cheap-- unless, of course, you go with the Kia Rio. It features sleek, modern styling and upscale appeal inside and out. Additionally, it only costs $200 to upgrade to the 5-door hatchback version, a fraction of what you might pay with other brands. This grown-up car also features an A/C, a CD stereo with USB input, and a fuel efficient engine.

Importance of a Down Payment

As we mentioned before, one of the most important things to know when car shopping is how much down payment on a car you really need.

First of all, the larger your down payment is, the smaller the balance on the loan will be. That means that your down payment directly affects how much you will have to pay each month. Additionally, borrowing less money means you'll pay less interest over the life of the loan. Coming up with an extra $1000 could save you thousands over the life of the loan.

How much down payment on a car you pay also affects how long your loan term will need to be. The faster you can pay off the car, the less interest you will have to pay. This is important to the dealer as well. Many won't offer loan terms over 36 months, because the risk of default is higher.

The down payment on the car also affects the risk of defaulting on the loan directly. Statistics have shown that higher down payments result in lower rates of default. This makes sense since it's harder to give up on a $2000 loss than a $500 loss.

When you know how much down payment on a car you really need, you can make a more informed decision about buying a car. Get your free, no-obligation new car price quotes today and find great offers from dealerships in your area!