Coming up with a good-sized down payment on the car you want can seem like a long, drawn-out process. But, it is definitely worth it! Luckily, there are ways you can speed up the procedure so that you can get into the car you want in less time.
The Importance of a Large Down Payment
Showing up to the dealership with a considerable down payment is great for you, but it also makes the dealer and the lender happy, too. It makes the entire process go smoothly, and it gives everyone a feeling that the car purchase is right for you.
Less Interest to Pay: Any money you put down upfront will be taken off the top of the total amount owed on the car. If you are trying to avoid getting behind on your car loan, a bigger down payment is clearly the best way to go.
More Lender Confidence: The lender is trying to get to know you based on everything you present to them, including your credit report and the size of your down payment. When the lender sees that you are able to come up with a larger down payment, they’ll feel more comfortable with your ability to make future car payments.
Possibly a Lower Interest Rate: Some lenders will give you a lower interest rate if you are able to increase the amount of your down payment.
However, if you have very bad credit, they may not be able to do anything about the established rate, and a larger down payment may be a requirement rather than just a recommendation.
What Credit Experts Recommend
Credit experts say that putting 20% down on a car is the best way to go. You can reverse-engineer how much to spend on a car based on this recommendation. If you can’t afford to put 20% down on a $15,000 car, then maybe you should get a $10,000 car instead, with a down payment that’s $1,000 lower.
You should try to save up as much as you can for a down payment, but it’s understandable that each person has different circumstances that limit what they are able to save each month.
Sell Unwanted Things
Unwanted items lying around the house are the perfect candidates to sell on Craigslist or eBay. That way, you can turn something you don’t want into something you do want—by using this newly earned money to purchase a new car. This is one of the best ways to find the cash you need for a down payment; it can happen a lot quicker than saving money up over time.
The Classic Yard Sale: If you don’t have any big-ticket items to sell, maybe you can go with one of the all time classics: a yard sale. Gather up a bunch of smaller items and sell them all at once in your yard or out of your garage. You may be able to come up with a few hundred or even a thousand dollars extra to put toward your down payment.
Rent Out a Room
If you have a room in your house that is going unused, you can rent it out and use that extra money for your car’s down payment. Even if you rent your room out for $300 – $500, you’ll have plenty to put down on a new car in just a short amount of time. Bonus points if you end up finding someone you don’t mind living with and you’re able to keep them on for a long period of time.
Work with the Lender
If you find the right lender, they may be able to help reduce the amount needed for a down payment or take away the need for one altogether. You should consider this as a last resort because, many times, this will only lead to a longer repayment period or a higher interest rate. You don’t want to end up owing more on your car than what it is worth, so consider this option only under specific circumstances.
Downsize the Car
You might not want to hear it, but maybe you’re looking at a car that you just can’t afford. If the down payment too hard to swing, it’s a good idea to look at a car that is more within your means.
Use the car that you’re dreaming of as motivation to start a savings account for the down payment. In the meantime, you can drive a smaller, practical car that may end up saving you a few hundred dollars a month. Those extra monthly savings will get you into the car you really want; it’s just a matter of time.
Choose the Right Dealer
You want to make sure that the dealer you use has the right connections to get the deal done with a down payment that is comfortable for you. Here at Ride Time, we specialize in working with people with bad credit and down payments of all sizes. Sit down with us today, and see just how relaxing it can be to work with someone that knows what they’re doing.