Should You Tell a Car Salesman Your Down Payment?

When it comes to buying a car, paying cash can hinder your chances of getting the best deal. Dealers anticipate making money on the back-end, through financing, so if you tell them upfront that you're paying in cash, they know they won't make any money from your financing. It's best to not tell a car seller that you have a down payment until you've agreed on the purchase price of the vehicle. A larger down payment will help you avoid high monthly car payments, longer terms, excessive bank financing charges, and being in a negative equity situation when you decide to trade or sell the car in the future.

If you have bad credit or are trying to finance your first car, having a down payment of at least 15-20% or more is attractive to bad credit and first-time lenders. It's possible that telling the dealer that you have financing for your car right from the start could hurt your chances of negotiating the sale price of the vehicle. Aim for a down payment of at least 15-20% when buying a car; the more, the better. Auto Navigator provides advertised inventory from participating dealers to help you search and save your favorites to find the car that best fits your budget and lifestyle.

Be aware that if you go to a car dealership without being prepared or focused on a monthly payment, the car salesman may present you with payments or try to confuse you using the “four square” technique or another presentation. This could result in hundreds or thousands of dollars more in additional interest and financial charges. Before you calculate your down payment, determine the dealer's cost and calculate a new car offer with fair benefits. Your credit score can also affect negotiations for the car you're interested in buying.

Taking the time to save a down payment before buying a new or used car will pay off when it comes time to change your vehicle.