Big down payment or minimum down payment?
 

I’m deployed right now and I’ve got my new Jeep on order and should be able to pick it up in early Fall. Since I’m deployed I don’t really have too many expenses and I’ve been saving all my money intending on making a 10K down payment with some money left over for the savings account, a few mods, and a drive up to Michigan to see my family. My question is, is it smarter to make a big down payment or save/invest the money? My enlistment is up in 2010 so I want to go for a 36 month loan just incase I can’t reenlist; I would hate to get a longer loan then loose my job and have this vehicle payment that I couldn’t afford. I also just got promoted and my raise in pay would completely cover my vehicle payment if I were to put 10K down so essentially I wouldn’t feel a difference from going from no car payment to driving a brand new one. I’ve started looking for a loan and it looks like I’m going to get about 5.0% APR if I go for a 36 month loan which puts me at about $500 if I put down 10K and about $850 if I don’t. I can afford the $850 but I would prefer not to if I don’t have to. Oh, I’m also single so the extra money each month from putting 10K down would help pad all the extra expenses accrued from taking out the ladies. So what would you do if you had the choice, 10K down or the minimum? - KY

A nice down payment is good, however if you are definitely going to invest the money and not spend it elsewhere then you can probably get a better than 5% return elsewhere. I also think it is a good idea to have some money saved just for emergency situations.

As long as the $10,000 is not your entire life savings I would put the money down. What I mean by this is make sure you have a thousand or two for an emergency stashed. Many will say keep the downpayment and make the higher payments but overall the biggest reason to make as big a downpayment as you can afford is not to drop your payments but to overall pay less for the vehicle. If the jeep you want costs $30,000 and you put $0 down you are financing the whole amount and paying intrest on it thus making the overall costs larger. If you make a $5,000 downpayment you are only financing $25,000 thus the intrest is less. If you make a $10,000 down the financed amount is $20,000 thus less intrest paid in. The lest intrest you pay overall the less your jeep will cost you. This cam be big money when you are talking the diference between a couple hundred and a couple thousand down.

I'm with the other two posters on this. (pearl-drum-man & only_in_my_jeep) If the 10K is not goingto wipe out your entire savings then the big down payment is good. :yup:

Unless the 36 months is @ 0% interest. There you could leave the $10K in even a passbook savings account and use it to make up the difference in the payment each month and will you come out ahead as long as you don't use that money for anything else. (:what?: yep I know, as clear as mud)

However, I like the idea of not owing more than my vehicle is worth just incase of an accident where the vehicle is totalled or stolen. FYI, I put $8k down on mine when I ordered.

I did zero down, but I also have 4.5% financing.

In our economy today, I would have a hard time believing you could get a better return on your $$$$, then you would be paying in interest for the vehicle. For that reason I believe it's in ones best interest to put down as much $$$$ as possible in order to cut the monthly payments. One reason we are in such a sorry state of affairs today, is because credit is so easy to obtain for those that cannot afford it in the first place.

I agree with a large down payment, but that $10k is enough to put a nice down payment on a house. A single guy making good money should have the goal to be able to buy a home once you get out of the air force. Once girls get a little bit older, the sexiest thing a man can have is his own home.

DO what you need to do now, but try to have enough for that home downpayment in three years. . . . . your entire life's financial situation basically rests on how early you are able to own your home.

I don't think in todays market you are going to do 5%. That being said the idea of 0% 3yrs. and supplementing your payment with the $10,000 over the time of the loan sounds like good advice then you always have your cash buffer in the bank. Only thing you need for this plan is good credit and self control.

It all depneds on what you can afford. If you have a good beacon score, you can probably get some great deals on financing. Since intrest rates are low, that could work to your advantage. Certainly though, if you have a pile of money just layin around, you can throw a down payment at um. Our budget doesn't allow for very large purchases at a time, but we have credit cards and manage them wisely. More than one is always paid off. If we need to make a down payment on something, what I'll do is put it on a card, and then make a balance transfer to another car that will offer zero percent for 12 months, and pay it off with no intrest. If we cannot get it done in 12 months (which is rare), I'll transfer it again to another one at zero percent. Credit cards can be great tools if you don't go nuts with them.