Understanding Car Financing & Down Payments

Auto-Financing-Calculator-MoneyWhen it comes to car financing near Indianapolis, Indy Car Financing has you covered. But before you consider financing a new or used car, it’s important to understand the basics of car financing as related to down payments. To learn about the details of down payments and related financing issues, let our handy guide answer your questions.

New Car Financing

Financing a new car can be an affordable reality for most buyers if they consider the benefits of making a larger down payment. Conventional wisdom is 20 to 25 percent is the normal, but his amount can vary depending on the state of the economy and an individual’s financial situation. What’s important to understand is the larger your initial down payment is the shorter your finance term will be because you’ll have less to pay overall. When you make a smaller down payment, your monthly financing payments will be higher.

Used Car Financing

Since used cars typically cost less than a brand new car, financing a pre-owned vehicle is a little different. A 7 to 15 percent down payment is more the norm because there is less depreciation to worry about with a used car. In general, used cars depreciate much slower than new cars, since the original owner took on most of the initial depreciation. However, it is still recommended that you pay as much as you can afford for your down payment to lower the cost of your monthly financing payments.

Other Factors to Consider

If you can’t afford a large down payment, you can always make monthly payments that are larger than the stipulated amount. This will allow you to quickly build equity and pay off your new or used vehicle sooner.

To better protect your investment, it’s worth considering gap insurance. If you’re financing a new vehicle and it is stolen or totaled during the first few years of owning it, covering your car with gap insurance can be an excellent option. Gap insurance can be particularly helpful for buyers who opt for a small down payment because this type of coverage can help to offset the amount that still need to be paid off.

Indy Car Financing Helps Indianapolis Drivers

To learn more about car financing and down payments, contact the experts at Indy Car Financing. Setting up a consultation about your next vehicle purchase is easy when you call (855) 468-6215.

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