{"id":2026,"date":"2018-05-23T15:52:33","date_gmt":"2018-05-23T22:52:33","guid":{"rendered":"https:\/\/lendingarch.ca\/?p=2026"},"modified":"2018-05-23T15:52:33","modified_gmt":"2018-05-23T22:52:33","slug":"do-i-need-a-down-payment-for-a-car-loan","status":"publish","type":"post","link":"https:\/\/bestlendersfor.ca\/do-i-need-a-down-payment-for-a-car-loan\/","title":{"rendered":"Do I Need a Down Payment for a Car Loan"},"content":{"rendered":"

If you\u2019re a Canadian in the market for a new car, you might be interested in securing a car loan to finance your new, exciting purchase. When it comes to purchasing a car, several different components are involved, including the possibility of utilizing a down payment.<\/span><\/p>\n

For many, the question of whether or not to use a down payment toward their loan is a big one.<\/span><\/p>\n

A down payment is a sum of money that is initially put toward a purchase. You may ask yourself: \u201cDo I need a down payment to secure my loan?\u201d<\/em><\/span><\/p>\n

The answer is simple: not usually.<\/span><\/p>\n

While this may surprise you, it is not always necessary to utilize a down payment. It can be helpful if, for example, you have bad credit.<\/span><\/p>\n

However, even if you have good credit, there are pros to putting down money toward a loan, and many Canadians choose to go this route. With more information, you can decide if a down payment is the right choice for you to take in the loan process.<\/span><\/p>\n

GET APPROVED TODAY <\/a><\/strong><\/p>\n

The Perks of a Down Payment<\/h2>\n

It is not always necessary to put down money upfront toward a car loan, but there are perks to doing so.<\/span><\/p>\n

When considering whether or not to use a down payment, evaluate the possible pros: a better chance of\u00a0approval for a loan, the possibility of lower monthly payments, saving money on interest charges, the ability to pay off your loan quicker and also being able to build equity.<\/span><\/p>\n

Here we look at all the benefits of using a down payment for your car loan.<\/span><\/p>\n

A Better Chance at Approval<\/span><\/h3>\n

For some people, the biggest factor in deciding whether or not to use a down payment is the state of their credit. In many cases, people who have less-than-ideal credit choose to (or are asked to) put money down to increase their chances of approval for their loan.<\/span><\/p>\n

When someone with bad credit puts down money upfront, the loan size they are applying for decreases.<\/span><\/p>\n

Often, lenders will be more willing to approve a smaller loan with a down payment attached, than approve a large loan that poses more of a risk. In cases of bad credit, down payments are extremely beneficial.<\/span><\/p>\n

However, even if someone has stellar credit, down payments are still a useful and beneficial asset in securing a car loan.<\/span><\/p>\n

GET APPROVED TODAY<\/a><\/strong><\/h3>\n

Save Money on Interest Charges<\/span><\/h3>\n

Along with having a better chance at securing your car loan, you\u2019ll also save money on interest charges when using a down payment. By securing a smaller loan option, you\u2019ll likely pay less in interest charges over the span of the time it takes you to pay your loan back.<\/span><\/p>\n

This is also especially helpful to those with bad credit.<\/span><\/p>\n

Typically, interest charges can be extremely high when you have less-than-ideal credit. By utilizing a down payment, those with bad credit can save money through better interest rates.<\/span><\/p>\n

Saving money on interest is always a plus. It allows you to put your money toward things that really matter, like emergency funds and retirement, important occasions and more.<\/span><\/p>\n

Pay Off Your Loan Quicker<\/span><\/h3>\n

When you choose to make a down payment, you\u2019ll likely have a much smaller loan amount. This allows you to pay off your loan quicker than if you had a larger loan for the entire amount of your car purchase.<\/span><\/p>\n

For many people, this is a huge selling point for utilizing a down payment. It means you\u2019ll have fewer monthly payments and feel secure driving your car, which you will own in a shorter amount of time.<\/span><\/p>\n

Who doesn\u2019t enjoy being debt free?<\/span><\/p>\n

Build Equity<\/span><\/h3>\n

After buying a car, the value of that car can diminish over time and often very quickly.<\/span><\/p>\n

Due to this, many suffer from being upside-down on their purchase. This means that you owe more on the car than what it is worth. This is known as accruing negative equity. However, when utilizing a down payment, you can help avoid this and build equity.<\/span><\/p>\n

This is a valuable, important component to be aware of when applying for a car loan.<\/span><\/p>\n

GET APPROVED TODAY<\/a><\/strong><\/p>\n

The Cons of a Down Payment<\/h2>\n

For many Canadians, using a down payment to secure a car loan is extremely beneficial.<\/span><\/p>\n

However, there are a few downsides to consider as well. Cons such as having to put more money down upfront and investing time toward saving for a down payment (when you need a loan quickly) need to be considered.<\/span><\/p>\n

Putting a large amount of money down, upfront, is a huge financial decision.<\/span><\/p>\n

For some people, utilizing a down payment is simply not financially feasible. In other cases, people simply do not want to put a large sum of money down, even if they have the ability to do so.<\/span><\/p>\n

For those who do not have the money to put toward a down payment, saving up can be considered a con. If you need a loan quickly, you may not want to spend months or even years saving up in order to get your new car today.<\/span><\/p>\n

Will You Use a Down Payment for Your Car Loan?<\/h2>\n

Do you need a down payment to secure your loan? No.<\/span><\/p>\n

As we discovered, down payments are not required, but they can be helpful. Many Canadians choose to use a down payment to secure their loan because they have a better chance of being approved, they save money on interest charges, they pay off their car loan quicker and they build equity<\/span><\/p>\n

Now that you\u2019re aware of the pros and cons of utilizing a down payment on a car, you can make an informed decision on how you want to proceed with the loan process.<\/span><\/p>\n

Whether you decide to use a down payment \u2014 or forego it \u2014 LendingArch is ready to match you to a car loan<\/a> based on your needs and current financial situation.<\/span><\/p>\n

GET APPROVED TODAY<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

If you\u2019re a Canadian in the market for a new car, you might be interested in securing a car loan … Read more<\/a><\/p>\n","protected":false},"author":2,"featured_media":2454,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22,20],"tags":[18,19,21],"class_list":["post-2026","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-down-payment","category-car-loans","tag-canada-car-loans","tag-car-loan-down-payment","tag-car-loans"],"yoast_head":"\nDo I Need a Down Payment for a Car Loan | LendingArch<\/title>\n<meta name=\"description\" content=\"Contrary to what you may believe, you don't always need a down payment for a car loan. 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