Benefits of a Down Payment

When you buy a vehicle at Kevin Grover Buick GMC in Wagoner, OK. You want to spend as little as possible to get the most car. So why would you even consider a down payment? Because putting some cash upfront can actually save you money over the long term by providing the following benefits.

Lower Monthly Payments

The biggest benefit of making a down payment is a lower monthly installment, which rewards you with a lower total cost over the life of the loan. For example, if you want to buy a vehicle that costs $30,000 at an Annual Percentage Rate of 3.0 percent over 48 months, here are two options.
• If you put no money down, your monthly installment reaches $664 for a total cost of $31,872 over the full term.
• With 20 percent down or $6,000, your payment drops to $531 per month, which equals a total of $25,488. You save $6,384, which is more than your down payment.

If you want to calculate the effects of different down payments on your monthly installment, use our online Monthly Car Payment Calculator.

Staying Above Water

If you buy a new car, it depreciates by as much as 20 percent when you drive it off our lot. After the first year, the loss in value reaches an additional 10 percent. If you do not consider depreciation when financing your purchase, your loan could quickly go under water.

This term refers to negative equity: the amount you owe on the loan will be more than the value of the vehicle. You will not be able to sell the car or trade it in because the compensation that you expect will not be enough to pay off the loan.

One way around this is to make a down payment that equals the expected depreciation after a year or two. Your loan will stay above water because what you owe will be less than what the car is worth.

Easier Loan Approval

If you have a low credit score or poor credit in general, it might be difficult for you to get any kind of an auto loan because lenders do not want to risk losing their money and going through the expense and effort of repossessing the car.

Putting money down increases your stake in the financing. You aren’t likely to walk away from the money you’ve just contributed. This makes lenders more likely to give you financing, maybe at more favorable rates than what you’d get without a down payment.

If you want to know ahead of time whether or not you can get approved for a loan with your current financial situation, then fill out our convenient pre-qualification form. By filling in the basic information, such as your name, job, and employment, you enable us to assess your credit information before you come down.

We can then tell you what monthly installments you qualify for whether or not you decide to make a down payment. You will then be able to shop confidently by looking at only at cars that are within your financing price range.

If you have any questions about how loan approvals work, please contact our finance team. They’ll be happy to provide answers and deliver estimated monthly payments based on you real-life situation.

Options for No Down Payment

You may be convinced that a down payment is the best way to begin financing your car purchase. However, you might just not have the money. In that case, you still have a few options for protecting your loan.
• Trade in your current vehicle. Instead of selling your current vehicle to a third-party, why not trade it to us. The value we place on your trade-in will have the same effect on your loan is making a down payment.
• Buy gap insurance. This insurance fills in the gap between what you owe and what the car is worth in case the vehicle is totaled. It helps eliminate the disadvantages of depreciation.
• Get a cosigner with good credit. When someone cosigns, he or she agrees to take on the risk of repaying the loan if you fail to do so. This makes lenders more likely to qualify you for a loan with better interest rates.