How Much Down Payment Is Needed Before Big Purchases
Getting ready to make a big purchase can be exciting and frightening at the same time. On the one hand, you have likely been looking forward to this item for quite some time.
On the other hand, you know that your bank account is likely to take a big hit the moment that you make the purchase.
For many big items, you will be able to pay over time. This has the added benefit of allowing you to keep some money in the bank while still being able to enjoy the item.
At the same time, you will need to get some money together on the front end for a deposit.
Here are a few big purchases that you might be considering and the suggested down payment for each.
Purchasing a New Home
It is no secret that buying a new home requires a significant amount of money. Most people simply do not have the money to pay upfront for a new home, so obtaining a mortgage becomes a necessity.
This is especially true if it is your first house. In order to better your chances of getting approved for a mortgage, it is recommended that you have a deposit of 10 to 20 percent of the purchase price ready to use.
Buying Furniture
If you are about to move into a new home, you might have quite a bit of furniture to buy.
This can get quite expensive, so most people will look to finance most of the big purchases.
You can best do this by buying the majority of your pieces from the same store.
You can then apply for financing. Put down as much as you can in order to make sure you do not pay a lot of interest in a big purchase.
Consider at least a 20 percent deposit as a starting point.
Getting a New Vehicle
Buying a new car can be exciting as well. To secure the best type of financing, go in with at least 10 percent ready to pay in cash when looking for cars for sale.
Alternatively, you can trade-in your existing car and use that as a deposit on a new vehicle.
Each specific dealer may have different financing options, but this is a good rule of thumb when making a big purchase.
These are just a few of the major big purchases you might be considering in the near future.
The key is to begin saving for the necessary deposit so that you have the money available to get the item when the time comes.
This will also save you some money down the road on interest, so that is certainly something to consider as well.
Category: Family Finances
