The Finance Blogger

Low down payment loans

Low down payment loansMany people are looking for a home loans, auto loans, a consolidation loan or some other kind of loan.  Always borrow the least amount possible. Low down payment loans will allow you to conserve cash or replace cash you do not have. They have inherent risks that many borrowers may not be familiar with. Take for example someone who is buying a car and needs an auto loan. Many people are really excited about the new car. They are not really thinking about the terms of the auto loan. Or how much money they want to put down on the loan. These are the typical Low down payment loans that trip many people up. They can cost them hundreds if not thousands of dollars in additional interest charges that they could otherwise avoid.

Low down payment loans – When They are Valuable

A low down payment loan means you have little or no money to put towards the car that you are buying. The only time that this approach should be used is when the interest rate on the car loan is zero and you have somewhere else that your money can be used, saved, invested that will generate more return. Otherwise put as much money down on the car as you can.

This latter approach will have several primary benefits. The car loan monthly payment is going to be lower which makes monthly budgeting easier and you will also pay a lot less interest over the life time of the loan. If the loan is zero interest then it is not costing you anything.

Consumers with large down payments as compared to people with low down payments will usually enjoy a better interest rate. They are viewed as being lower risk and will have a greater probability of meeting their monthly payments.  Consumers can save thousands of dollars by avoiding a low down payment, going for a larger down payment and possibly receiving a lower interest rate which saves them even more money.


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