Even if you plan to finance your next car, you may still need to make a down payment on that auto loan.
Let’s face it: Only a fraction of us will ever use cash to buy a car outright. In fact, according to a recent study by Experian, more than 85% of new car purchases were financed last year.
But just because you’re taking out a loan for your next car doesn’t mean that you will walk out the door without paying anything. There’s still your down payment to consider.
A down payment is a partial contribution that you, as the buyer, are expected to make when you finance a purchase. Down payments are typically required to be made in cash, and are commonly requested for auto loans as well as home mortgages.
A down payment is essentially the bank’s way of ensuring that you also have a little “skin” in the purchase, instead of your lender taking on all of the risk. Continue reading “This means that the vast majority of car-buyers will pay for their four-wheeled purchases with help of auto loans”