Tips for Finding Low Down Payment When Selecting a Used Car

Posted Monday, Jul 31, 2023

Not everyone has the deep pockets that allow them to pay top dollar for a vehicle. This is the main reason why there is a big market for pre-owned vehicles. If you are already on a shoestring budget, then you will want to find a used car with a low down payment. Contrary to popular belief, finding a pre-owned car with a low down payment is not that difficult at a used car dealership. 

What is a Down Payment? 

When buying a pre-owned car, the down payment is the amount of money that a person will have to pay upfront in order to get the car. In short, the down payment is the payment one makes before the monthly recurring payments in the loan agreement. 

While the higher the down payment, the less you have to spend on monthly repayments, many folks aren’t comfortable letting go of thousands of dollars upfront for a used car. This is where finding options at used car dealerships with a low down payment can get you car financing with lower monthly payments. 

How Much Should You Spend? 

While banks, lenders, and used car dealerships all provide auto finance, customers must first decide how much they are ready to spend on a vehicle. Since consumers nowadays have a plethora of options when it comes to used cars and features, examine what sort of automobile best meets your needs and identify the amenities you want in a vehicle (as well as those you can do without). 

You wouldn't want to spend a lot of money on an SUV when a basic car would suffice. Furthermore, the larger the automobile and the more amenities it has, the higher the price, which implies higher monthly payments. When purchasing a secondhand automobile, be realistic in order to avoid unnecessary spending. To avoid unnecessary costs while purchasing a used automobile, be realistic about your needs and the sort of vehicle you truly require. 

When purchasing a car, a reasonable rule of thumb is to keep your continuing expenses (maintenance, loan payments, insurance) to no more than 20% of your family income. This creates a cushion so you don't wind up paying too much for the automobile in comparison to your home costs. It is crucial to remember that an automobile, whether new or old, begins to depreciate as soon as you drive it off the dealership lot, so keep that in mind while putting money aside for a car. 

How Much is Too Much (or Too Little!)? 

The amount required for a down payment on a used car differs from that required for a new one. When purchasing a new automobile, the sum payable upfront is usually fixed. When it comes to previously used automobiles, there is a lot of leeway, which is good for those on a budget. 

According to experts, a down payment of roughly 10% of the entire cost of the used automobile is usual. For example, if you want to spend $15,000.00 on a vehicle, $1,500.00 is a good beginning point. However, if necessary, paying more or less may be doable, depending on the individual’s financial situation. 

You may also be given the option of paying nothing at all, known as a zero down payment. While this keeps money in your pocket, it may result in larger monthly payments down the road, which is not a good idea, especially if your finances aren’t in order or you have other financial obligations, such as a mortgage. 

Putting down the most money possible will result in more rewards, most of the time. For instance, in addition to cheaper monthly payments, you'll have the vehicle paid off sooner. Looking at your position and lifestyle might help you determine how much money you can put down initially. This is why it is crucial to weigh the pros and cons of paying a low (or high) down payment on a pre-owned vehicle based on your financial situation before committing to a monthly payment. 

If you are looking to make a trade-in, then you can always find the Actual Cash Value (ACV) of your current vehicle that can make a big difference in the loan amount, the initial down payment, and the monthly payments that you have to pay. 

Apply for an Auto Loan 

Despite the fact that vehicle loans have set interest rates, loan conditions can be negotiated. The loan rate will be determined mostly by the individual applying for the loan's credit score. Those with a higher credit score often pay a lower APR on a used automobile loan. Improving one's credit score has several advantages, the most important of which is that you may apply for a higher loan amount while still receiving a reduced APR. 

When shopping for vehicle loans, it is generally advisable to negotiate loan conditions. For example, if a lender or used vehicle dealership qualifies you for a 3% APR, you will pay less on a long-term loan. A short-term loan, on the other hand, allows you to make bigger monthly installments. 

Before determining whether to receive a short-term or long-term vehicle loan, a person should first assess their budget and costs. With all credit financing alternatives accessible, it should be simple to choose one that meets your requirements. 

Royal Auto Dealer - La Verne has a huge inventory of pre-owned vehicles that are great for first-time buyers or those who are looking for a second car. Apart from a plethora of options, the used car dealership offers plenty of low-down-payment options as well, making it easier for you to find the perfect pre-owned vehicle without having to break the bank.