Average Down Payment

Roader · August 16, 2015

My last truck was paid off.. there's was nothing wrong with it. I became a fan of the 14-15 front end. So I ordered how I wanted it to be. Put $13,000 down. I've never been so happy with a vehicle! Everytime I go outside I always grin and say wow that's mine. I'm in love with this truck wife and kids love it as well. And a major convincing thing was my brother was my salesman.. anyways financed almost 35 grand and payments are $721.60. High payment for alot of people but I can easily afford it.

Is that a 4 year loan?

smrr1 · August 17, 2015

Is that a 4 year loan?

good question. the math does not add up. looks like $35,000 breaks down to a 4.167 year note or 50 months at 1.44 interest. never seen a loan of 50 months or an interest rate that doesn't end in .19 or .29 or .39 (you get the idea).

not that it is really any of our business on here but he did put it out there.

Silver ice 6.2 · August 17, 2015

To make a long story short.. I had zero credit pounts.. yes 0 points on my credit score. Anyways I have the contract here and I was wrong.. I have a 8.99 interest rate and financed 39,925.90. I got more stuff added on gap insurance, low jack, 72 month bumper to bumper, and the dupont protection for 72 months interior and exterior. I know I'm gonna be bashed for getting all that stuff. But if you knew my story I hit rock bottom years ago. So I apoligize for not checking my speel in before posting. If it wasn't for my brother and him pulling some major strings I wouldn't get financed.

hurricanoday · August 17, 2015

To make a long story short.. I had zero credit pounts.. yes 0 points on my credit score. Anyways I have the contract here and I was wrong.. I have a 8.99 interest rate and financed 39,925.90. I got more stuff added on gap insurance, low jack, 72 month bumper to bumper, and the dupont protection for 72 months interior and exterior. I know I'm gonna be bashed for getting all that stuff. But if you knew my story I hit rock bottom years ago. So I apoligize for not checking my speel in before posting. If it wasn't for my brother and him pulling some major strings I wouldn't get financed.

Nothing to apologize for. I have terrible credit and already have a 2011 CTS V loan owing 22k at 12% and I wanted a new truck. Everyone of course wanted me to trade in the caddy which I didn't want to do so I sold my 04 Sierra Denali for 14k and had to put 25k on my 15 denali. had to put a lot down or wouldn't have been financed. Paying 12% on both loans and 900 a month

I wouldn't have financed all that other stuff but 9% is by no means great but isn't terrible. I messed my credit up and paying the price as well. I love my truck but if I had better credit both payments would be about the same as one now.

Gonna sell the caddy and refi my truck next year.

Nellyinda803 · August 17, 2015

Great info everyone. Looks like I should put between 10k-15k down. I plan to have it for a long time

'01LS1 · August 17, 2015

Great info everyone. Looks like I should put between 10k-15k down. I plan to have it for a long time

Everyone is in a different financial situation, credit rating/history, variable State laws etc. But know that most banks/credit unions etc. consider the rebates/discounts to fit into their loan approval.

If they'll do an 80% loan on the full msrp of vehicle that means they would loan $8,000 on a msrp of $10,000(Those numbers are simplified to make the point. I know that is not the value of a new vehicle).

So in that example, you would need $2,000 cash or $2,000+ off in discounts/rebates.

To make those numbers closer to reality, msrp of $40,000 & you purchase at $32,000. The only glitch on that is you may have to pay cash for TT&L(or anything above the $32,000 mark).

Each bank has a different policy seemingly in terms of the percentage of vehicle value they will loan on, but 80% of full msrp has seemed to be fairly constant around here for the avg. buyer.

Again, some variables as noted in the first sentence.

Interest rates are also lower on new vs older.

smrr1 · August 17, 2015

To make a long story short.. I had zero credit pounts.. yes 0 points on my credit score. Anyways I have the contract here and I was wrong.. I have a 8.99 interest rate and financed 39,925.90. I got more stuff added on gap insurance, low jack, 72 month bumper to bumper, and the dupont protection for 72 months interior and exterior. I know I'm gonna be bashed for getting all that stuff. But if you knew my story I hit rock bottom years ago. So I apoligize for not checking my speel in before posting. If it wasn't for my brother and him pulling some major strings I wouldn't get financed.

No need to apologize for anything. It is what it is. I just enjoy breaking things down. Your business is just that, yours. Good on you for trying to get your credit going.

silverWS6 · August 17, 2015

I put 2k down lol

Feel kinda poor in here with y'all talking about 10k+ down payments and paying in full! Lol

Robert.jean1 · August 17, 2015

I have never in 20 years put a down payment on anything. I don't keep my trucks long enough to IMO waste cash on something that depreciates in value. For every 1,000 down you save about 10$ a month on payment.

crushNchowda · August 17, 2015

Never put a down payment on anything that has 4 wheels and depreciates every time you start it up and drive out of the driveway.

Another issue is California's high rate of distracted drivers, I'd hate to put down a large chunk of cash into a car, then get rear ended.....

I guess if you plan on keeping the truck forever, then down payments may make sense......I usually finance a car/truck within the range of monthly payments i can afford and trade in after my car hits 100,000 miles.

I'd much rather invest my money into my properties (home & 4 unit apartments).

This makes no sense. I'll give you a PERFECT example why too. I totaled my '14 SLT All terrain 4x4 CC Sierra - $50k+ truck new. I owned it for 2 years (22 payments made to be exact). I put $16,000 down initially + trade equity of $3000-4000 roughly $20k in total)

If I didn't put that money down and just financed the vehicle in its entirety, #1 my payments would have been $902/month instead of $508 (now let that sink in for a minute - what could you do w/ an extra $400/month investment-wise or anything really?) and I'd be out $19,844 total out of pocket after all my payments. Truck was valued @ $38800 after factoring in depreciation, sales tax estimated for replacement, and less my deductible. Orginal price of truck, + sales tax = $52,600 + financing cost total (est $1500) = $54,100 roughly, @ 22 payment mark the payoff would've been $19.822, leaving me w/ $18,978 net roughly to either buy a new truck or pocket.

No downpayment scenario - $19,844 out of pocket for payments

Downpayment scenario - $16,000 DP + $11,176 in payments = $27,176 - $8,668 ($394 * 22 months saved) - $18,508 in real money.

The "cost of money" (IE: financing) is REAL, and even w/ the low rates we have nowadays is tangible. In reality the cost of financing I used is higher...... @ 1.99% I believe the actual out of pocket expense if you took a full 60 months to pay that exact note was more like $1800 - so you can take an extra $300 onto the "no downpayment scenario" making the total delta between the 2 scenarios I described above $1636

Obviously, when you start talking about financing rates in the 8,9,12% range like some people are posting on this thread, that number becomes MUCH more significant and you don't need to put pencil to paper to figure out the ramifications.

Whether its a house or a car - 20% down in my book, and anything else - Smaller ticket purchases - pay in full in cash whenever possible.

I always like to prepare myself for "worst case scenario" and paying INTEREST on something that DEPRECIATES is a HORRIBLE use of your finances FYI - the more you can mitigate this the better off you will be. NOW, if you want to argue points of lower or no downpayments on a HOME - that is something I could consider, but there are many factors to consider the biggest being location and cost of financing. Paying for a home in full can be dumb financially in some instances.

Clocked92 · August 17, 2015

My truck OTD was right around $56,000 taxes, extended warranties and everything else included. I put $25,000 down at 0% interest. My payments are $231 bi-weekly for 60 months. Basically to improve my credit rating.

Being at 0% interest, I really didn't need a down payment, but I did so that my payments wouldn't be as much. I learnt at a young age not to throw money away on interest payments. The less you finance and the earlier you pay the loan off, the better you are. Doesn't matter if that's 0% interest or 10% interest. 5 years down the road, it hurts to still be paying on the $50,000 loan when the trucks only worth $20k.

I agree Crush, paying interest on a depreciating asset is bad idea.

crushNchowda · August 17, 2015

My truck OTD was right around $56,000 taxes, extended warranties and everything else included. I put $25,000 down at 0% interest. My payments are $231 bi-weekly for 60 months. Basically to improve my credit rating.

Being at 0% interest, I really didn't need a down payment, but I did so that my payments wouldn't be as much. I learnt at a young age not to throw money away on interest payments. The less you finance and the earlier you pay the loan off, the better you are. Doesn't matter if that's 0% interest or 10% interest. 5 years down the road, it hurts to still be paying on the $50,000 loan when the trucks only worth $20k.

I agree Crush, paying interest on a depreciating asset is bad idea.

I agree on you reasoning as well, you could argue - hey @ 0% that's basically "free" money right? Well technically yes, only if you're talking about money as an "infinite" resource. The reality is EVERYONE - even Bill Gates - has a finite amount of $$$ @ their disposal. So even though you got a great interest free loan, putting money down on the truck equates to a smaller loan, which equates to lower payments - if you can afford to part w/ $25k @ one wack, that's good - now you have an extra $500+ a month @ your disposal that instead of being put toward a loan on a depreciating asset (your truck) even @ 0% you're still "losing" money because you're throwing it @ a daily depreciating asset, you can now take that extra $500+ a month and put it toward paying down an APPRECIATING asset like your home, OR the most financially sensible, put it toward an IRA, mutual funds, muni bonds, etc. etc. etc. - something that gives you a return.

Now take that same logic and apply it toward an expensive vehicle purchased w/ no money down on a HIGH interest rate and you're doing yourself a pretty large disservice.

tnchevy · August 17, 2015

Pay cash if you can and keep it for 10 years or more if you can make yourself do it and you will be better off in the long run. I know people who make lots of money that borrow and pay interest on everything and others who are not exactly rich but pay cash for everything that they can, including vehicles.

thefishhawk · August 17, 2015

I agree on you reasoning as well, you could argue - hey @ 0% that's basically "free" money right? Well technically yes, only if you're talking about money as an "infinite" resource. The reality is EVERYONE - even Bill Gates - has a finite amount of $$$ @ their disposal. So even though you got a great interest free loan, putting money down on the truck equates to a smaller loan, which equates to lower payments - if you can afford to part w/ $25k @ one wack, that's good - now you have an extra $500+ a month @ your disposal that instead of being put toward a loan on a depreciating asset (your truck) even @ 0% you're still "losing" money because you're throwing it @ a daily depreciating asset, you can now take that extra $500+ a month and put it toward paying down an APPRECIATING asset like your home, OR the most financially sensible, put it toward an IRA, mutual funds, muni bonds, etc. etc. etc. - something that gives you a return.

Now take that same logic and apply it toward an expensive vehicle purchased w/ no money down on a HIGH interest rate and you're doing yourself a pretty large disservice.

I think you are too hung up on the payment and not the opportunity cost of your down payment. The money is worth more to you the longer you keep it in your pocket. You just as easy could have taken the down payment you threw at the vehicle and invested it in mutal funds or a house, all you are doing are redistributing, assuming you get 0% from GM. I'm better off paying them with depreciated money down the line than cash that's worth more right now, by putting a big down payment down you are just making yourself feel better about your monthly cash flow, but you are paying them in dollars that are worth more today. Whether you put a down payment down or not, you are still throwing money at a depreciating asset, you are acting like you didn't just because you put it down now instead of in installments. I'm better off investing the down payment for myself today, than in lower payment increments down the road when interest rates are this low.

if your credit is bad or we are talking about a high interest rate environment, then you have to figure out if the opportunity cost of your down payment is greater then the interest rate at the time.

larryz71 · August 17, 2015

THERE IS NO RIGHT ANSWER -- everyone's financial situation is different, and everyone has different philosophies..

My opinion -- No one has a crystal ball so arguing is pointless. If you KNOW that you are going to put your money into an investment vehicle that will produce a higher rate of return than the interest you are paying on a car loan, then you are better off financing as much as possible due to the opportunity cost of your money.

If you PLAN on putting your down payment money into an investment vehicle and NEVER do and it sits in your savings account earning you .01% then you would have been better off putting as much down as possible.

I personally like to pay down my debts as quickly as possible, but this is by no means the RIGHT way to do it, it is just the way I was raised.