Jump to content

Pricyber

Down payment - is there a magic dollar amount?

Recommended Posts

Is there a magic number, that regardless of the loan amount, you can put down and make lenders feel secure?

 

For example, I can put 20% down on a $20,000 vehicle, and that number is $4,000.  But if I put 20% down on a $50,000 vehicle, that is $10,000 to part with up front.  I don't particularly want to part with that much cash up front, so is there a magic dollar amount that lenders will basically say go ahead and approve?  I know there are other factors such as credit history, score, DTI, etc but assuming those are all solid?

Share this post


Link to post
Share on other sites

Agree with Marv, especially on a new vehicle.  Once a vehicle has been titled, it loses ~10-15% of its value vs. a new car.  The lender is going to want to be covered for that, plus the administrative costs, etc.

 

Just because that is what they may prefer, that doesn't mean that is what you need to do.  You should do what is most financially prudent.  If you can finance at 0%, you should put nothing down.  If your interest rate > your net rate of investment return, you should put as much as you can down.

 

If your credit history and employment are solid, you shouldn't NEED to put anything down except maybe tax/tags/fees.  Whether or not you choose to is another matter.  I haven't put anything down on a car in quite a long time, and I have bought a lot of cars.

Share this post


Link to post
Share on other sites

Down payment will vary.  Strong profiles can get away with zero down payment.  When I bought the most recent Jaguar, it was a zero-down deal on a never-titled, never-in-service car that stickered north of $90K.  Even taxes and other fees were rolled into the note.  A little over a year later, the note is pretty much killed...which will leave me in search of the next toy. 

Share this post


Link to post
Share on other sites

a local dodge dealer is advertising $10 down payment, 0% interest, and no payment for 90 days.

 

The down side?

 

you have to buy a POS dodge.

 

IMHO 20% and finance for no more than 36 months is the way to go.

Share this post


Link to post
Share on other sites
13 minutes ago, credit_help said:


Even if the APR is 0%?

it remains a depreciating asset even at 0%.

Share this post


Link to post
Share on other sites
it remains a depreciating asset even at 0%.

 

It depreciates quickly after buying and over time but not because of the loan terms. :-)

Share this post


Link to post
Share on other sites
54 minutes ago, credit_help said:

 

It depreciates quickly after buying and over time but not because of the loan terms. 🙂

owing money on a 6 year old dodge minivan is not a good path to financial stability

Share this post


Link to post
Share on other sites
owing money on a 6 year old dodge minivan is not a good path to financial stability


Nothing to disagree there. It’s the connection between depreciation and terms of loan I was trying to understand.

Share this post


Link to post
Share on other sites

Agree with credit_help.  Putting money down out of pocket when you can finance at 0% does not make prudent financial sense.  In fact, even if the rate were not 0%, if you could get a risk free return greater than the interest rate it makes sense to do so.  The fact that it is a depreciating asset is immaterial.

 

Now if you wanted to argue against financing a car that you can't buy with cash, different subject.

Share this post


Link to post
Share on other sites
Agree with credit_help.  Putting money down out of pocket when you can finance at 0% does not make prudent financial sense.  In fact, even if the rate were not 0%, if you could get a risk free return greater than the interest rate it makes sense to do so. The fact that it is a depreciating asset is immaterial.
 
Now if you wanted to argue against financing a car that you can't buy with cash, different subject.


Thanks CTSoxFan. You said it better than I could ever say.

Another thing I have heard is it is always better to buy a slightly used vehicle. But there a few articles at jalopnik that showed that may not always be the case depending on the make/model of the vehicle.

Share this post


Link to post
Share on other sites
2 hours ago, credit_help said:

 

It depreciates quickly after buying and over time but not because of the loan terms. 🙂

the slower you pay the more likely you're upside down. how many horror stories have we seen about people rolling negative equity from one 72+ month note to the next?

Share this post


Link to post
Share on other sites
3 hours ago, hegemony said:

it remains a depreciating asset even at 0%.

There ARE occasions where one can remain ahead of the depreciation curve and never be upside down (and even begin appreciating after about the first five years), even three years after driving it off the lot.  However, this is more apt to be something reserved for the specialty makes and models, not the standard fleetmobile. 

Share this post


Link to post
Share on other sites
Posted (edited)
23 hours ago, hegemony said:

the slower you pay the more likely you're upside down. how many horror stories have we seen about people rolling negative equity from one 72+ month note to the next?

Agree, but you are comparing 2 different things.  You can smartly finance the whole note at 0% then continue to be smart and pay it to completion (or to the point of positive equity), or do something dumb like trade it in after 12 months and roll the negative equity into a new loan.

Edited by CTSoxFan

Share this post


Link to post
Share on other sites
Posted (edited)

Notice the key words in my original statement...risk free.

 

Somehow I have a feeling that guy is like the typical gambler...only talks about the big wins and conveniently forgets about the losses.

Edited by CTSoxFan

Share this post


Link to post
Share on other sites
10 hours ago, CTSoxFan said:

Notice the key words in my original statement...risk free.

 

Somehow I have a feeling that guy is like the typical gambler...only talks about the big wins and conveniently forgets about the losses.

He averages 35%.  :lol: 

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Today's Birthdays

  • Member Statistics

    • Total Members
      177,128
    • Most Online
      1,528

    Newest Member
    Simplebeauty03
    Joined

About Us

Since 2003, creditboards.com has helped thousands of people repair their credit, force abusive collection agents to follow the law, ensure proper reporting by credit reporting agencies, and provided financial education to help avoid the pitfalls that can lead to negative tradelines.
×
×
  • Create New...

Important Information

Guidelines