Have you been saving and saving for a new vehicle? Wondering if you’ve saved enough? Our Mercedes-Benz finance experts at Mercedes-Benz of Annapolis are weighing in.
How Much Should a Down Payment Be?
As a general rule of thumb, experts suggest you aim for at least a 20% down payment for a new vehicle purchase and at least 10% on a pre-owned vehicle. Keep in mind, you can also apply your trade-in’s value to your down payment.
How Should I Decide How Much to Spend?
Working backward and setting an auto payment goal for yourself can be beneficial.
Enter this information into an auto-payment calculator to get an estimate of your monthly payment:
- The vehicle’s purchase price
- Your desired term
- Your estimated financing rate
- The recommended down payment
Adjust the down payment amount up and down to see how a larger (or smaller) down payment can affect your payment.
What if I Can’t Make that Large of a Down Payment?
Typically, there aren’t set rules for a down payment, only suggestions. However, there are a multitude of perks for making a larger down payment:
- You may get more loan offers extended to you
- You’ll have less to finance, which means you’ll pay less interest
- You’re less likely to become upside down in your loan
Are There Any Disadvantages to a Large Down Payment?
When deciding on a down payment, it strictly depends on you and your financial situation. If pulling that much money from savings could be too risky for you, or you stand to benefit more from investing it elsewhere, it may be a better decision to have a lower down payment.
Still have questions? Reach out to our Mercedes-Benz dealership in Annapolis, MD – we’re happy to help!
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