Your down payment will also affect how much you interest you'll pay on the loan. For example, a $33k Z with $5k down at 5.7% for 60 months is about $400/month. You'll end up paying $3200 in interest. Same car with $15k down is about $208/month and $1650 in interest. If you put $15k down and shorten the loan to 36 months, you'd pay $330/month and only pay $1000 in interest.
So basically, going from $5k @ 60mo to $15k down @ 36mo means:
- $2200 less paid as interest
- $70 less per month
- Own the car 2 YEARS earlier
There are usually 2 cons to large down payments. First, if you'd kept the money and invested it, your return may partially offset the added interest you'll be paying. Secondly, since inflation usually occurs over the term of the loan, the bank basically loses whatever the inflation rate is off the APR since the $400 or so you're paying per month is worth less and less as time passes on the loan. However, since the economy is in the toilet right now, investment returns are low and the inflation rate will be mostly stagnant so these two cons don't apply to most people right now. I'm simplifying these concepts (mostly because I don't know what I'm talking about).
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