Question

Why would you want to offer a down payment on an item such as a car or a house?​

Answer 1

When you buy expensive items with a loan, you often need to make a down payment to cover a portion of the purchase price. That initial payment is often critical for getting approved, and it can affect your borrowing costs throughout the life of your loan. As a result, it’s wise to understand how down payments work so you can choose the right down payment amount.

Answer 2

A down payment helps the buyer to obtain ownership of the property or vehicle and also helps them to reduce the monthly payment towards the mortgage principal and interest. The buyer can get a lower interest rate by paying a higher down payment.