Stumping up a deposit for a new vehicle can be a difficult prospect for many new car buyers, yet alone if they are trying to scrape together enough funds for it to be a large deposit. So does it really matter then if you are unable to put down a large deposit for a new car? Should you hold off on your decision to purchase a car until you are in a position where you have enough funds for a large deposit?
Why put forward a large deposit?
As with any other instance where you might be forking out for a big purchase, the more money you can set aside, the smaller the amount of funds you borrow from a financier.
If you are in a position where you can put forward a large deposit then you will reduce the size of your loan. This can afford you several potential benefits, providing of course that you can keep up with the commitments of the loan. These benefits include:
- A potentially lower interest rate on the loan
- A reduction in overall interest costs across the life of the loan
- Lower monthly repayment obligations across the life of the loan
- The ability to repay the loan in a shorter timeframe
What should I consider before putting forward a large deposit?
Although the incentives in putting forward a large deposit might seem compelling, if you are going to do so, then you need to be particularly attentive to certain circumstances.
First things first, you need to understand just how much you can afford to set aside and commit towards a deposit. Remember, you will have other financial obligations in your life, and your personal circumstances could change at any minute. It is always wise to be prepared for any risk, including the prospect that you lose your job or have sudden emergency expenses arise.
One of the things you will need to take into consideration is whether putting forward a large deposit now could leave you with less cash to meet your repayments. If for any reason you find that you are unable to keep up with your repayment schedule, this could have long-term ramifications for your credit history.
What’s more, pursuing low interest rates shouldn’t necessarily be your end goal. Instead, you should be opting for a loan that is structured to make it easier for you to keep up with your commitments. So just because you can’t save up enough funds to attain the lowest rate available, that doesn’t mean you should hold off on purchasing a vehicle, as not only could you miss out on a time-sensitive deal, it could even have other implications on your day-to-day livelihood.
The Fincar team is here to help you with all your financing needs. Contact us today to help arrange your next car or equipment loan.