Down Payments Still the Norm for New Car Buyers
November 1, 2007
Despite the increasing availability of 100 percent car loans, almost eighty percent of new car buyers will make a down payment on their next car purchase according to a new survey from automotive consumer web site BuyingAdvice.com.
The majority of the group surveyed, 54 percent, said that they would use only cash to make their down payment, while just under 21 percent said they would be using a combination of cash and trade-in value toward their new purchase. Twelve percent said their down payment would be totally covered by their trade in. And only 13 percent said they would not be making a down payment of any kind.
Industry statistics show that a tight economy is increasing the average length of car loans and that the proportion of the sale price covered by the down payment is declining.
Most consumer advice experts recommend making a down payment of around 20 percent of the purchase price, roughly equivalent to the average depreciation of a new car in its first year.
The spilt of buyers who adhere to this expert advice is roughly down the middle. With 36 percent of those polled saying they would finance more than 90 percent of their new vehicle. Plus, an additional 14 percent saying they would finance between 80 and 90 percent. On the flip side, the other 50 percent of respondents said they would be financing 80 percent or less of the purchase price.
The survey was taken among 2268 users of the BuyingAdvice.com web site. They all stated they were within 30 days of making a new car purchase and were drawn from the 50,000 consumers who request new car price quotes from the web site each month.
The study was the latest in a series of surveys being taken by the consumer advice and price quote web site that provides one of the most current and comprehensive pictures of the buying habits of online car buyers.
