When setting a budget for a new vehicle, the down payment can be key. Our Volvo finance team at Volvo Cars Silver Spring has put together a comprehensive guide to help you determine just how much to save.
Recommended Down Payment
Generally, a down payment isn’t required. However, a down payment can be valuable when applying for a loan and can help you save on interest costs. Experts typically recommend that you put at least 20% down on a new vehicle and at least 10% down on a pre-owned one.
Your Trade-in Value
Your existing vehicle is also a valuable tool when purchasing a new vehicle. Our team is always happy to offer you top-dollar for your vehicle, or you can choose to apply the equity to your new purchase. This could save you thousands on your new Volvo car or SUV.
Determining Your Down Payment Cost
To calculate 20%, simply multiply the total purchase price by 0.2. You can also utilize an auto payment calculator, which typically is preloaded with common figures such as a 20% down payment. The calculator can also give you an estimate of your monthly payment, so you can see if you could put down less or may need to put down more.
The Risk of a Small or No Down Payment
Without a sizable down payment, lenders may be apprehensive about working with you. Due to depreciation, you also run the risk of quickly becoming upside down in your loan, which is also known as negative equity.
If your vehicle is totaled or stolen, you will still be responsible for paying off your total loan, even if your insurance company determines it is worth less than you owe.
Visit our Volvo dealership in Silver Spring, MD with any other questions or to get started today!
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