When purchasing a car, be prepared to make a down payment. Dealership customers have many questions about this aspect of financing, such as payment amount and payment methods accepted. Here’s a simple guide on car down payments, courtesy of our Toyota finance center.
Recommended Down Payment
Minimum down payments vary between dealerships. It can also vary depending on the car model, or whether buying a new or pre-owned vehicle. It may also differ depending on your credit score. Lower scores require higher down payments.
Usually, the minimum payment required is around 10%. Keep in mind this is the minimum and not the recommendation. The golden rule is to aim for a 20% down payment.
Why a Higher Down payment Is Better
The higher you’re able or are willing to pay, the more it shows lenders that you have the financial capacity to make an investment at the time of purchase. This makes you a viable borrower in the eyes of financial institutions.
In addition, higher down payments also shorten your total loan repayment length. This lessens the total interest paid as well as reduces the effects of negative equity.
How to Make a Down Payment
If you plan to visit the dealership with the intention to buy, then have a form of payment method ready. Dealerships accept cash, cashier’s checks, and debit cards. Most dealerships also accept credit card payments.
However, this is generally not recommended unless you can pay off the entire payment when the balance appears on your next credit card bill. This avoids accruing interest rates associated with paying off the balance in small monthly installments.
Whether you’re purchasing the Toyota Camry or Toyota RAV4, be ready to put in the recommended down payment. The dealers at Heritage Toyota Catonsville are ready to assist you.
