Lower Left Section – Down Payment

Dealership Trick: The sales person will usually start off by saying the banks generally prefer to have a person put 1/3 of the cost of the vehicle down. 

Buyer Tip: Financing sources do not require a fixed amount or fixed percentage as a down payment!

The sales person knows 85% of people buy based on the amount of monthly payments.  The higher the down payment they obtain from the buyer the lower the monthly payments will be. 

If the dealership is able to sell the vehicle at a significant amount more than the vehicle is worth a large down payment could cover the difference between the final sales price and the value of the vehicle.  The dealership will then be able to fund the sale with a bank.

If the down payment is smaller than the difference between the final sales price and the value of the vehicle the bank will not fund the loan.  The dealership then has three options: lowering the sales price of the vehicle, trying to get the buyer to put up a larger down payment or switching the customer to a different new and/or used vehicle.

Buyer Tip: The general rule to follow regarding down payments is to put an amount down with which you feel comfortable Review How Much Vehicle Can You Afford.

As a result of  previous research of financing through the Internet, banks or credit unions you know the monthly payments will be based on the value of the vehicle less the value of your trade-in, manufacturers rebates and the amount of your down payment. See Financing a New Vehicle.

Buyer Tip: If you are uncomfortable with the size of your monthly payment, increasing your down payment will lower your monthly payments. Decreasing your down payment will increase your monthly payments.

Buyer Tip: Don’t let the dealership roll the manufacturer’s rebate into the purchase price of the new vehicle when negotiation the price of the new vehicle.  Have the sales person list the manufacturer’s rebate separately on the Four Square under the Down Payment section.

Please Visit Our Site Sponsors: