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Is My 1000 Down Payment Enough For My Next Used Car?
One thousand dollars is a common amount that many bhph consumers budget to put down on a vehicle. It is a irrefutable fact that all bhph dealers want as much down as possible. Therefore, $1000 is an attention getter for the average bhph dealer. On most lots, $1000 down should move you from an entry level vehicle like a base Hyundai or Saturn to something a bit more substantial like a well equipped Chevrolet Impala, Ford Fusion, or Chrysler minivan.
Our advice here is to save a little more money to get a more upscale ride if you can. If you absolutely need a vehicle to get to get around, then you may be forced into an entry level ride.
The reason $1000 speaks to a dealer is because it demonstrates that the buyer has the sense of purpose and discipline to acquire that money. That dollar amount further indicates to the dealer that you have "skin in the game". By that we mean, that you are willing to commit your money to that vehicle. Remember, the more you commit, the less likely you are to default on your payments, and the more comfortable that dealer is when considering putting you into a vehicle. The simple mathematical fact to understand when dealing with a BHPH vehicle is that your dealer has much more of his money in the vehicle that you are considering than you are going to put down. Therefore, understandably, he is quite apprehensive about selling the vehicle to you in the first place. It follows, that the best way to make the dealer feel more comfortable about the contract with you is to give him as much down as possible. This limits his exposure financially. The less exposure for him the better chance for you to get the vehicle that you are after. That is why any BHPH dealer will ask for big down payments
However, let's face it, if you had a big down payment, and a great credit rating, you would not be on the bhph lot, but we believe that it is important that you understand the bhph dealers' position so that you can balance it with your needs. Also, please do not compare prices of your prospective bhph purchase with a comparable vehicle on a lot with conventional financing. You will not be happy with your bhph price. The typical bhph price is more, because of the dealer's risk, your bad credit history, and because of the bhph self finance model. Make peace with that or you will feel taken advantage of by the dealer. Therefore, $1000 may be a substantial amount for a down payment, it will barely make a dent in the price. Subsequently, what you can take away from that is that your $1000 will get you a vehicle.
The bottom line here is to embrace your circumstance as a bhph consumer, "go with the flow", and get behind the wheel.
This article was written by Brian McCormick of Providence, Rhode Island. Brian is a BHPH expert and has been involved in the used car and BHPH industry for over 40 years. He enjoys his family and his favorite sports team, The Boston Red Sox. He Graduated from the University of Rhode Island in 1970. Follow him on Google+