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Any discussion of vehicle financing requires a close look at the down payment

By Product Expert | Posted in For Fun, Helpful Advice, Leasing, New Vehicles on Thursday, September 26th, 2019 at 1:50 pm
A stock photo of the two people exchanging money after completing a deal.

How much should a down payment for a vehicle cost?

There are a lot of exciting things about the vehicle-buying process. However, financing is going to likely be the most stressful element for most people. If someone is taking a traditional financing route through a bank, credit union or other lenders, having a check for a down payment is a big part of this process. So, how much should a down payment for a vehicle cost? Unfortunately, there isn’t a straightforward answer that will apply to everyone. No two Meridian Honda customers have the same financial situation. Here are a couple of broadly applicable pieces of advice our financing team has seen put into practice over the years. Let’s take a look at some things that might help you.

READ MORE: Is old information unnecessarily costing your money or opportunities?

Basics of financing a new vehicle

The golden rule for financing a new vehicle has remained the same since it first began – 20 percent for new vehicles and 10 percent for pre-owned vehicles. Again, these are just general numbers and your individual credit situation may require more or less money to be paid upfront. If a buyer has the means to put down more than the minimum amounts, there is a strong chance they will see additional benefits like lower monthly payments, lower interest rates, if not both.

Lending money represents a risk to the lending institution, and they want to minimize that risk as much as possible. By paying as much as you can afford upfront, you may be able to reap otherwise unadvertised incentives. Additionally, by paying the bank a larger down payment, you can stave off the unavoidable depreciation of your vehicle and becoming upside down on the loan – where you end up owning more in debt than the vehicle is worth.

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What if I can’t afford to make a down payment?

You should really make every effort to try to hit the magic 20 and 10 percent down payment goals when you’re buying a vehicle. However, sometimes that just isn’t possible. You might still be able to make a deal, but you’ll want to do some things to protect yourself.

  • Gap insurance – If your vehicle gets stolen or destroyed beyond repair, this type of insurance coverage pays the lender however much money is remaining on the loan.
  • New car replacement – When used in conjunction with other insurance instruments, a new car replacement policy will pay for a similar vehicle that would replace what you’ve lost.
  • Co-signers – Using a co-signer helps the lender spread the risk of non-payment to more people. If the original borrower doesn’t make payments, the lender can get their money from the co-signer.

If you have any questions about how to find the best possible deal on a new or pre-owned vehicle, make an appointment with the Meridian Honda financial team today.

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TESTIMONIALS

Just wanted to say "Thank you!" for verifying an issue with a tire on my daughter's 2007 Honda Civic as I was driving her from the greater Houston area to Charlotte (and her on to Virginia). The Service team was friendly, accommodating, communicative at every step and if we lived anywhere close, I'd bring vehicles in there for service. Thanks again for taking care of ... us today on our travels!
Jon Walk
I think it is an all around good business to buy a car from! The service department is absolutely wonderful, the staff is kind and caring, and they can fix your car faster than u ever thought
Lauren Pollard
I've really enjoyed dealing with Adam on my last 3 Hondas The thing I like best about my new 2016 CRV is the back-up screen!!!
Wilda Gibson
Awesome people and so easy to deal with. No need to go to Brandon or Jackson to buy a Honda!!
Beth Boatman Nabors
The absolute best place to have a car serviced! I love Meridian Honda!
Katie Elizabeth Davis
Brought in my husbands truck to the body shop and WOW! What great service! Quick, friendly, and reasonably priced! Even though our vehicle isn't a Honda, they for the parts and work done faster than any other place I have been! Thanks for great service!
Leslie Horn Vollor
I had the best ever car buying experience! Kelly Watson was friendly, funny, never pushy, and so very patient with me.
Clancy Lee Willis
Big thanks to Kelly Watson, Kelly Pollard and Douglas Davis! We had a wonderful experience buying our van! Great service!
Stephanie Allen Reid
A stress free car buying experience!! Thanks so much!
Jennifer Lee
Always great cars, great service and great people!
John Halbrook
Caring and professional work. The people were friendly. Would recommend to everyone. I have always had a very good experience.
Charlotte
Came in for an oil change and tire rotation and Josh let me know a couple more things that needed to be done.
Lamar
Noone was pushy, they listened to what I wanted. They were very fair to deal with. My time in and out was fast.
Sarah
Fast and Friendly to the most satisfactory degree. Always ready to do what is needed and always referenced me as to the work done or needed.
Donald
Friendly staff, great service. Purchased 3 Hondas here and use them for all my service and tire needs. Sales and service are the best.
Sharon
Salesman did a great job helping us. Had the car we wanted. Will do buisness with again when car shopping again Thanks!!!
Scott
I just liked when I pulled up everybody was so friendly I love the clean building the service was excellent the service was long they were very prompt I just enjoyed my service
Lashanti
They worked very hard to get me the car I wanted with in my payment range in a very timely manner. This dealership has a friendly atmosphere. It was an enjoyable experience. Can't say enough about Myrna, she is the best!!! Thanks for all you do!!
Sylvia
Can get in and out very quickly. Enjoy the coffee and friendly staff while I am waiting. Don't mind having my car serviced.
Carol
I was treated with respect, kelp up to date on repair. My salesman, Kelly Watson, was most helpful. I am always treated like I am a very special person!
Sarah

Welcome to Meridian Honda in Meridian, MS

Honda has become the most-trusted brand in America. Meridian Honda seeks to follow this example and become the most-trusted dealership in the Meridian area. From our sales team, to our service department and body shop, we want our customers from the past, present and future to be confident knowing they will receive the highest level of care and respect when they visit Meridian Honda.

Our team at Meridian Honda is excited to get to know each of our customers on a personal level. At Meridian Honda, you will be able to browse an extensive selection of Honda cars, trucks, SUV's, vans and crossovers. This includes all of the headliners from the Honda model lineup, such as the Accord, Civic, CR-V and Pilot. In addition to our inventory of new vehicles, Meridian Honda is home to many top-quality pre-owned models from Honda and other brands. Take a look around our website to learn more about everything we have to offer at Meridian Honda. We look forward to your visit!