Down Payment

A down payment is the upfront amount a customer pays towards the purchase of a vehicle, with the remainder being financed or leased. It can come from cash savings or an equity trade-in credit from a previous vehicle. In Canada, making a larger down payment reduces the loan amount, which can lower monthly payments and decrease the total interest paid. It also reduces the chance of negative equity since the buyer is financing less relative to the car’s value. Dealership sales and finance staff often encourage an appropriate down payment to help customers get approved by lenders (since it shows financial commitment) and to improve the overall terms of the deal.