by If you have researched used car financing and read expert tips online, you have surely come across the famed 10%-down-payment rule. It says that you must try your level best to pay 10% of the net used vehicle’s price as a down payment so that the auto loan you take stays manageable. But what if you cannot afford to pay 10% as down payment? Will you be taking on an extra loan burden then? What if you can pay 50% as down payment? Should you then go ahead and reduce your loan burden?
Let’s clear all your doubts regarding the 10%-down-payment rule here.
The rule is not etched in stone
In other words, you do not gain or lose much if you do not stick to the 10%-down-payment rule. The best used car dealerships in Greenville, SC offer you flexible down payment. That is, you can pay as much as you can afford. If you pay a high down, you take less in loan, and your interest payments remain affordable given the low loan amount. And if you decide to pay a low down payment, the opposite happens, but you can limit your interest payments here as well by shortening your credit span.
The overall pay used car financing plan matters, not just the amount of down payment. Take Family Auto of Taylor’s case as an example. With us, you can pay as low as $500 as a down payment and you can combine that with our 3-year bad credit financing plan to keep the loan and interest payments affordable. As one of the best used car dealerships in Greenville, SC, we also buy your old used car through our trade-in deal with which you can increase your down payment amount to any sum you want, and further reduce your interest rate.
The 10%-down-payment rule is merely a suggestion. A recommended down figure merely to get you started.
What if you can pay 50% as down payment?
The best used truck dealers in Greenville will always encourage you to pay a high down. Used trucks are expensive, to begin with, and paying off almost 50% initially helps your bad credit loan approval. Similarly, you can also pay 50% for a used sedan or SUV if you can afford the same but before you single-mindedly think about interest payments and make such a commitment, consider a few aspects.
Paying that much cash upfront might diminish your reserves. Sure, you pay a low interest rate over three years but spending a chunk of your savings might come with dire consequences when an emergency hits you or your family. Additionally, you might get better returns by investing the extra down that you are paying on a used car now. The extra interest payments will not matter if you can claim better returns from the invested sum.
Pay as much down payment as you think is good for you
And give less thought to the 10%-down-payment rule because it is not a rule. In the best buy here pay here in Greenville, like Family Auto, you get used cars at all price ranges, combined with deals and offers that help your budget. Hold on to the cash you have saved as building a reserve takes time. Also, think about paying a high down so that your interest rate does not shoot up. The secret is to balance all sides and pay as much as you can afford.