Down Payments

by Patrick
(Wake Forest, NC)

Question: I have a question about down payments. I'm looking at purchasing a new vehicle, and I'll either pay the total cost up front or at least a significant percentage (maybe 60-70%).

I read your page on how dealerships profit from a down payment, so I was curious if the same principle applies for larger amounts. I'll be spending about $20,000. My main goal has been for the lowest OTD price possible and not necessarily the monthly payments.

Answer: Hi Patrick. With regards to down payments it usually becomes more profitable when a dealership is negotiating with a payment buyer and in your case you know the right thing to do, and that's not focus on payments, but the sale price and out the door price. That's how successful four square negotiating works from a buyers stand point.

In addition to payment buyers, a larger down payment helps a dealer to profit on bad credit auto loans. In your case, you should be okay as long as you go in prepared and know what sales price you are willing to pay.

By the way, a bigger down payment in your case (or even all cash) does not necessarily benefit the dealership in anyway, so any cash discount they may tell you are getting is probably fluff and you should be able to get them to go lower.

Final note...Just focus on the sale price getting where you want it (and trade allowance, if applicable) and the rest of the numbers should take care of themselves.

Please let me know if you've got any further questions.

Good luck,


Click here to post comments

Join in and write your own page! It's easy to do. How? Simply click here to return to New Car Questions.

Share this page:
Enjoy this page? Please pay it forward. Here's how...

Would you prefer to share this page with others by linking to it?

  1. Click on the HTML link code below.
  2. Copy and paste it, adding a note of your own, into your blog, a Web page, forums, a blog comment, your Facebook account, or anywhere that someone would find this page valuable.