One of the most common questions car buyers have "what kind of down payment do I need to finance a car?" or, "How about a beautiful luxury automobile like a Cadillac from Sunset Cadillac of Sarasota?" Most people you ask out there will give you the usual "20%," and that's pretty accurate. It's a good idea to make a down payment of 20% if you can afford it.
OK, I know what you're thinking. Twenty percent seems a little steep, right? A little research will tell you that the average down payment for a car in 2017 was about 12%. So a lot of people are making far smaller down payments and financing more. But again, reaching for that 20% is better.
There are a lot of reasons:
Right off the bat you're in line for better loan terms, a higher chance for loan approval, and lower monthly payments:
Consider the fact that you'll have more equity in the car or SUV. This is always good when you're considering the value of the vehicle over time. It especially helps you avoid owing your bank or lender more than the car is worth.
You will also set yourself up for a loan with a lower interest rate. A nice size down payment signals to the banks we work with that you're committed to the vehicle. You now represent a lower-risk borrower so that some lenders will give you a better interest rate.
If your credit score is less than perfect a sizeable down payment will help you qualify for financing. Again, a little research (Edmunds.com) says you'll have a better chance of getting a loan from a bank if you can put at least 15% down.
So when it comes to the car down payments, bigger tends to be better. While lots of folks put down less and are fine, the best idea is to try to get to that golden 20% if you can. You'll simultaneously own a gorgeous Cadillac from our dealer along with a significant financial position to enjoy throughout your time as a Cadillac owner.
