If you’re new to the Chevrolet financing process, down payments can seem confusing at first. How much should you put down? What happens if you only put a small amount down, and what are the advantages to a larger amount? Shea Chevrolet breaks down the nuances of down payments below. Visit us to find the right financial plan for you!
Why Make a Bigger Down Payment?
You have flexibility as to how much to put down, but there are disadvantages to a small down payment. A bigger down payment means a smaller loan, which in turn leads to lower monthly payments, a lower loan-to-value ratio, and a better interest rate.
A car also loses around 20 percent of its value in the first year, which is more than one year’s payments typically cover, so without a down payment you can quickly end up upside down on the loan.
How Much Should I Put Down?
The rule of thumb is simple: a down payment on your new Chevrolet car should ideally be 20 percent of the cost. For used cars, you can put down 10 percent. Remember, though, that the bigger your down payment, the lower your interest will be and the more you’ll save over the term of the loan.
Can I Get Away with Less?
If you’re not able to afford a 20 percent down payment, you’re not out of luck, but you’ll need a strong credit history and will end up spending more in the long run. Consider switching to a lease, which may not require down payment, or buying a used car. Alternatively, you can always catch up and make larger payments within the first year to avoid being upside down.
Apply for Chevrolet Financing in Flint, MI
A large down payment on your new or pre-owned Chevrolet vehicle helps you stay ahead of depreciation and keep up with interest. Visit us at Shea Chevrolet and talk to our finance department to find the right plan for your finances today!
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