Car Loans – How Much to Put Down
We’ve all been there. We head to the dealership, fall in love with one of the shiny beauties on the showroom floor, and the salesperson snaps us back to reality as he asks, “How much will you be putting down?”
This can be a difficult question if we haven’t truly given this some serious thought. Even if we have, looking at the numbers in black and white can be scary.
Let’s face it, cars are expensive. What our parents paid for really nice family cars frequently wouldn’t even make a dent in the cost of what we, their children, find desirable. That $3,000 bonus check or the IRS refund may not go as far as you’d like when it comes to purchasing power at a car dealership.
Ideally, you want to find a good deal where you don’t need money down, and your APR is 0% for the length of the loan. Putting money down is fine. It decreases you monthly payment, and frequently it’s the only way you are going to get the car you want. With the availability of Plain Green Loans Promo Code, the requirement of paying less interest rate is possible. The selection of the right application should be done to get the desired results in getting of the loan amount. Some important steps should be followed to get the advantages in taking car loan.
However, the more money you put down increases your own risk going forward. If anything happens where you simply can’t keep paying for the car, you not only lose the car but you lose your entire investment.
Stay liquid if at all possible and keep the down payment in a safe interest bearing account from which you make your monthly car payments. Open a Money Market account and deposit your IRS check or your bonus check or whatever cash you had planned on using as the down payment. Let it accrue interest (some of these Money Market accounts are still very generous even in this bad economy).
If you can’t find a car you like with 0% (or other negligible amount) and 60 months to pay, you have a few options. Whenever you are paying interest, it will add up to a considerable amount over the life of the loan. However, the longer you stretch out your loan the lower the payments go.
Depending on your budget, your total monthly payment should be your first concern rather than your total payment over the life of the loan.
For a $15,000 car with no money down and no interest, your monthly payments (after assuming sales tax of 7.5% and tax and title) for a 60 month loan will be about $272.
The same $15,000 car with no money down at a 7.3% APR for 60 months will be about $326 a month.
The difference between these two loans each month is $54, or a total of $3240 over next 60 months.
Now take this same $3240 and put it down on the $15,000 car with 7.3% APR for 60 months, and your monthly payment goes down to $261.
Buying a new car is always a numbers game but most dealers are willing to work with you to get your monthly payments into your comfort zone. Just be careful not to deplete your cash reserves for a down payment to buy a car you really can’t afford. That money will be gone for good.
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