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What's the point of a cash down?

In car ads, we always hear cash down this and cash down that, but what's the point of that?


First of all, what is it? Essentially, a cash down payment is money you pay upfront when purchasing or leasing a vehicle and that is not part of the monthly payments.


Now why would I give the dealership a huge amount of money before event driving my new vehicle for the first time? Glad you asked! The obvious reason is that your monthly payments will be lower. If we simplify the math (let's forget about interest and such variable): say the car you chose costs $24 000 over 72 months, you'd be paying around $334 monthly. Now, let's say you've been saving up and put a $4000 down payment... Your monthly payment would now be about $278! That means that's an extra $56 in your pockets that you can put towards other important stuff like more saving, groceries... or...you know... a new set of tires or brakes!


Now for a less obvious reason. Cars and trucks are now a need and not so much a want anymore, which means their price depreciates over time (no . It's always important to put money down as it shows the bank giving the loan that you can save money. This helps immensely with approvals. If your situation was to change, your down payment could also help you by having less negative equity when you go to sell or trade out of your car.


Long story short: we say YES DOWN PAYMENT! It'll save you money in the long run and can prevent unpleasant surprises when will come the time to sell the vehicle.