While it's nice to pay the full cash price for a car, if you're like most buyers at Glockner Honda, you'll need an auto loan for your purchase. Our Finance Department can present several installment options that can fit your budget. You just need to decide which option is best for you. You also have to think about whether you want to make a down payment, which has several benefits.

Your monthly payment is lower.

A lower monthly payment is the biggest benefit of making a down payment, which reduces the amount financed: the bigger the payment, the lower the monthly installment. You can figure out the exact numbers yourself using our online Payment Calculator.

For example, if you finance a $30,000 purchase with no down payment at an Annual Percentage Rate of 4.9 percent for 60 months, the monthly payment reaches $565. If you put 20 percent, or $6,000 down, the monthly payment equals $452.

You'll pay less overall.

A down payment lowers the amount financed, which eventually reduces the total amount that you pay over the life of the loan.

Using the previous $30,000 purchase example, without the down payment, your total payments go up to $33,900 over the life of the loan. With the 20 percent down payment, your total payments drop to $27,120, a difference of $6,780. Even if you factor in the cost of the $6,000 down payment, you're still saving $780.

You may get easier loan approval.

If you don't make a down payment, lenders may think that you're more likely to walk away from your financial obligation. Not only will they lose money on your loan but they'll need to go through the time and effort it takes to repossess your car. Making a down payment gives you a financial stake in the loan, making you less likely to default, and making you a better candidate for approval.

This is not an issue if you get your loan with our Financial Department. We're in the business of selling cars and building relationships, not financing. So, we do not use a down payment to determine whether you receive an auto loan. If you have no credit or poor credit, we will do our best to get you into the vehicle of your choice. If you have an existing car loan, we can refinance that loan to either a lower-interest to a different term so that your purchase fits within your current budget.

It prevents negative equity.

Negative equity, also known as being upside down, is when you owe more on the loan than the car is worth. This generally happens because vehicles can lose up to 40 percent of their value in their first year and typically lose about 15 percent every year after that. This may make it harder to sell or trade-in your car because you won't get enough money from the proceeds to pay off the car loan.

Making a down payment offsets some of that depreciation by covering it with cash.

What is a typical down payment?

The amount you should use for a down payment depends entirely on your budget. Many financial experts recommend 20 percent as a good balance between tying up disposable cash and maintaining a reasonable monthly payment.

In reality, the average down payment is closer to 12 percent. This average may be lower than the recommendation because of the low-interest rates. Previously, only higher down payment qualified for such rates. Now, because the low rates are available to all car buyers, there's no need to make such a large down payment?

What to do next

First off, if you have any questions or concerns about down payments or financing, please get in touch with us using our online Text box or by calling our number.

If you don't, you can get pre-qualified by filling out our online form. Pre-qualification guarantees that you'll get a loan suited to your budget before you buy your vehicle. You'll then know in advance how much you can afford and can narrow your selection down to the correct price range. You'll also have actual numbers that you can plug in, including the down payment, into our Payment Calculator.