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there are multiple ways to finance your new car ranging from buying through your savings to availing of a car loan. if you're planning to secure a car loan to finance your new car, you need to understand how one of the major factors can affect it significantly.
the critical factor that affects your car loan eligibility calculator and your probable emi value of the car loan before you calculate emi using a car loan calculator is the down payment.
a down payment is the upfront cash that you pay to the car dealer immediately after buying the car. the down payment is paid through your savings.
however, a down payment does not necessarily have to be a cash payment; you can opt for alternative payment methods like cheque, draft, or electronic transfer.
many banks and nbfcs believe the probability of the loan getting sanctioned is higher; if the customer pays off a large part of the car price, it reduces the risk of defaulting on the loan.
certain benefits come along with the down payment. often, the dealers might agree to a lower rate of interest and offer certain incentives through a special financing program. however, you need to read the fine print to understand the down payment terms thoroughly.
also, paying a down payment helps you offset vehicle depreciation as the value tends to depreciate at a rate of 15% every year; however, new vehicles lose their value at a rate of 25% in the first year.
making a down payment for your new car will help you manage your finances well and increase the probability of securing a car loan. some manufacturers offer zero down payment offers; however, it is advisable to pay the cash up-front to the best of your capabilities and reap long term net saving benefits.