When Should You Buy Low Down Payment Used Cars?
As a rule of thumb, experts advise used car buyers to pay at least 10% of the net cost as the vehicle’s down payment. This amount can also help you to avoid gap insurance and prevent the scenario of being upside down if your car is totaled during your possession. While there are a hundred reasons to pay a high down payment, affording the same is always not feasible. You might need the car now but do not have the savings yet. Or, you have the savings but cannot use it for the down payment right away. Low down payment used cars make as much sense as their higher counterparts, especially when the alternative is just not possible.
The net cost of the car is low
Used models of Ford Fiesta or Kia Soul will not cost you much. You can easily visit a buy here pay here with $500 down offer and pick up such a vehicle at the low-down payment. The four-figure initial cost brings down the upside-down or gap insurance factors and the financing will not be an economic burden on you as well. The heftier SUVs or pickup trucks cost nearly $20,000 depending on the model. Paying $500 as a down payment for these cars is understandably not advisable.
If you are just starting out
You will naturally want to pay a low-down payment if you have just joined a job, taken a mortgage or about to start a business. Either way, your savings fund will not have enough money to pay a 10% down payment. In such scenarios, take the low-down payment offer but also try purchasing gap insurance. Spread out the auto loan over maximum years, keeping an eye on the interest rate, so that your current monthly payments are low. In short, if you indeed paying a low-down payment, secure it in every way possible.
There is no car to exchange
All good car lots in Spartanburg, SC, offer trade-in to their customers. The dollar value of their old cars is used as a down payment during the purchase of the new used car. However, if you are buying your first car, you will naturally have to pay the down payment from your cash reserve and $500 might be the amount that you can offer. When you do not have a car to exchange, the need for the vehicle overshadows the thumb rule of down payments. Refrain from backing out if the car is a necessity. Pay low now and prepare well for the future.