When looking to purchase your next car through finance, a key consideration is how big the down payment should be. Below, we lead you through important factors to help you decide how much to pay upfront.
A poor credit score could mean paying a higher rate of interest, and if this is the case, look to pay as much upfront as you can to bring the total cost down once interest is accrued. If it's good, you can negotiate a lower APR and pay less initially, giving you access to the car you want sooner.
Generally, the value of a new car depreciates by around 20 percent immediately after purchase. Should you pay less than this percentage in a down payment, you could face a deficit if you sell the vehicle, as you may not get more than 80 percent of the brand new value back. Up to 20 percent of the loan would therefore remain unpaid. The same applies to buying a used car, but the depreciation amount is typically lower.
Try to predict your future financial situation and how this will impact on your ability to meet payments. If you're also planning on buying a house soon, it may be worthwhile to choose a larger down payment and a lower interest agreement to get the car purchase out of the way before mortgage payments begin.
For further advice and guidance on choosing the right finance plan for your circumstances, contact the expert team at your nearest Lookers dealership.