When you're looking for a car, it's tempting to consider the numerous zero money down offers that many car dealerships in your area are offering. But, there's a catch.
When you are unable or have not had time to secure a down payment for a car, having a no money down offer can help you get the vehicle you need right away. Unfortunately, if you have bad credit, it can be extremely difficult to get approved for one of these offers.
However, even if you don't have credit issues, there are plenty of reasons to have a down payment ready when you buy a car.
How A Down Payment Helps You
- Reduces depreciation losses
When you buy a new car, it automatically loses 10% or more of its value as soon as you drive it off the lot, and another 10 to 15% at the end of the first year. A used car may not lose as much value in your first year of ownership, but it still loses value over time. Depending on the amount you have to offer, a down payment will help you reduce the risk of owing more on the loan than the vehicle itself is worth. This can be extremely beneficial if you want to trade in or sell the car before the loan term is finished.
- You are borrowing less money
Even if you have a high interest rate, providing a down payment will reduce the amount you need to borrow from the lender, thereby reducing the interest expenses you would be paying if you financed the entire amount. In addition to potentially making your monthly payments more affordable, it will save you money in the long run.
- Improves your chances of loan approval
If you have questionable credit, a down payment will show the lender that you are willing to commit financially to the purchase. This will give them more incentive to approve you for a loan.
Get the Advantage
If you have damaged credit and are having trouble getting approved for an auto loan, Drivers Lane can help. As little as $500 towards a down payment may just be enough to help you get the vehicle you need. Complete our fast, secure and easy online application today and we will connect you with the nearest auto dealer in your local area that can help. Start today!