Auto Loans: Bigger Down Payment or Paying Off Other Debt?

Thursday, June 20 at 01:00 PM
Category: Personal Finance

When you take out a loan for a car, some people argue you should put down the biggest possible down payment, so your monthly payments are lower and you can pay it off quicker. Others advise prioritizing paying off other existing debts over making a big down payment. In reality, the solution that’s right for you depends on your financial situation.

You can get a low APR car loan with little or money down (with good credit). Use savings to pay off credit cards or other debt, not as a down payment. Buying a car, new or used, is a financial commitment. You can make a down payment, reducing the amount you’ll have to pay monthly on the vehicle. But what if you have more pressing debt, like credit card or student loan debt?

Does it make sense to sign up for a car payment plan and use the short-term cash to pay other debts first? We’ve analyzed the pros and cons of each choice. Read more here*.

 

*Link is a third-party site not operated or endorsed by Arvest Bank, an FDIC-insured institution.

Tags: Financial Education
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