In addition to choosing a new or pre-owned Honda model from our showroom, one of the biggest decisions that you’ll make at Heritage Honda Bel Air is related to the size of the down payment. Determining your ideal Honda financing down payment depends on a number of different factors. Here at Heritage Honda Bel Air, our financing experts are here to help you create an auto loan that works for your needs.
The Relationship Between Your Down Payment and Monthly Payments
Putting down more money upfront when you buy a new Honda car reduces the total principal amount you need to borrow for your car loan. However, the trick isn’t finding a specific dollar amount, but rather a percentage of the total. Experts typically recommend putting down 20 percent on new cars, which has the effect of offsetting the initial vehicle depreciation that occurs when you drive away from our showroom. Minimizing your total loan balance lowers your monthly payment, making the vehicle easier to fit into your monthly budget. Also, lowering your borrowing risk can help you gain access to lower interest rates from lenders.
Protection Against Negative Loan Equity
Another benefit of making a large down payment is that it serves as a defense against falling into a negative equity situation, also known as being underwater. If you borrow the entire purchase price of a car with zero down, you risk owing more than the vehicle’s market value. If the vehicle is totaled or stolen, being underwater can complicate your insurance claims, leaving you responsible for paying off the remaining balance out of pocket.
Speak With a Honda Finance Specialist Today
The team of professional Honda financing specialists at Heritage Honda Bel Air is ready to help you find a loan structure that works for you. Visit our dealership today to get behind the wheel of a new Honda hatchback, sedan, truck, or SUV. We look forward to helping you get approved!
