How To Deal With Car Loan Down Payments

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Car Loans Canada
How To Deal With Car Loan Down Payments
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• Buying a new car may seem simple at first, but
  there are plenty of things that one has to
  consider. If you are purchasing a vehicle for the
  first time, then it must be one of the most
  significant investments of your life besides
  buying a new home. There are very few lucky
  people across Canada that can pay for their new
  car upfront and don't have to go through any
  hassles. However, the rest, which is in the
  majority have to rely on a vehicle loan. So if
  you are buying a car for the first time and you
  also need to apply for a loan, then the first
  viable thing to do is the research. Here, we have
  created a guideline to help you with your car
  loan down payment and other things.

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What is the car loan down payment?

• When you buy a car on credit, there is a certain
  amount that one must pay to get the loan. Lenders
  need to reduce the risk of losses in case of
  default, and down payment works best for them.
  Paying a generous amount for the down payment
  indicates that you are able to pay the full
  amount of the loan on time. If you have saved 20
  percent of the total amount for a car loan, then
  its likely that your car loan will be approved
  without any hassle. However, the percentage of
  down payment slightly differs from lender to
  lender.

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• Today getting a car loan with bad credit is easy,
  and many lenders offer loans with any down
  payment with different terms and conditions
  depending on the credit condition of the
  applicant. You can use an online auto loan
  calculator that can help you find the required
  amount for the loan. The deposit you pay directly
  affects your monthly instalments.

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How to find the right amount for the down payment

• Once you select the car, you should start looking
  for lenders that are offering a car loan with the
  amount that fits in your budget. In most cases,
  20 percent works just fine, and for used car
  minimum, 10 percent of the amount should be kept
  in mind. Paying the required percentage will not
  only reduce your interest rate, but you can also
  expect more favourable terms and conditions.
• Though 20 percent is considered ideal in the
  market, many first time buyers choose to pay
  less. The average price for cars has increased in
  the last few years, but not the average income of
  people. Apart from this, there are plenty of
  other reasons like poor credit and poor financial
  condition.

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If you are paying the required 20 percent amount
for the down payment, you are surely eligible to
get the following benefits

• Lower interest rate
• Better chances of loan approval
• Reduction in monthly payments
• Greater equity
• No risk for upside-down loan situation (When you
  owe more than the actual value of your car)

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When you pay smaller down payments

• Find a car finance calculator, and you will find
  that the 20 percent down payment is the right way
  to go ahead. However, there are situations where
  you can choose to opt for a lesser amount.

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Low-Interest Rate

• You can keep your debt levels under control with
  careful observation of the market's conditions.
  You should be keen on interest rates and ask
  experts whether it is the right time to borrow
  money. If the interest rates are high, it is
  better to pay as much as possible for the down
  payment. The amount of total interest to be paid
  will be minimized.
• When the market is facing low-interest rates,
  then it is alright to pay a smaller amount. If
  the interest rates are in your favor, you can
  take the full loan amount even when you can pay
  the large deposit. You can use a car payment
  calculator to find out where your budget makes
  you stand in the market. Meanwhile, you should
  find a good financial adviser who can help you
  find the right investment that gives you more
  income with high-interest rates.

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Purchasing a secondhand car

• As we have already mentioned, a lesser down
  payment can be required when buying a used
  vehicle. There are a few benefits like having
  extra cash on hand for the repairs and
  maintenance work of your car. And it is better to
  keep extra money for maintenance work, which is
  usually not required when buying a new vehicle,
  at least for the first few years. Even if the
  previous owner has taken good care of the car,
  you have to be prepared with cash for emergency
  repair work. And to avoid such risk, you should
  find a reputed dealership where pre-owned cars in
  good condition are available.

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Summary

• If you are not struggling with credit score, poor
  financial situation, and have sufficient cash,
  then it is better to go with the required 20
  percent amount. However, there are several
  benefits of paying smaller down payment amounts.
  On lower interest rates, you can take the full
  loan and make a lucrative investment that
  provides higher interest. Smaller down payments
  are also useful for buying used vehicles.

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Apply for your car loan

• Our online application process takes only a few
  minutes to complete and we only ask for
  information we need.

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• [phone]