Dealership wants major downpayment?
Posted by Str8WiteMale@reddit | askcarguys | View on Reddit | 33 comments
Hello,
I’m in the process of buying a new Honda CR-V. The local dealership asked for a $500 down which I gladly accepted. They are now asking for another $7000 down.
My credit score is an excellent 810 and this large downpayment does not make any sense to me. Are there any common reasons as to why they would be asking for so much more upfront? With my score the maximum requested downpayment should be less than half of what they are asking for.
captainslowww@reddit
You’re gonna need to ask them, sorry. The credit score is great and all but it’s merely one piece of the puzzle.
OutrageousTime4868@reddit
100% agree. If you have an 810 credit score but make $15K a year they'll want a much larger down payment
Str8WiteMale@reddit (OP)
Made $50k last year. Vehicle is $53k pre tax
o0Spoonman0o@reddit
That's too much; and this is coming from someone who wasted WAY too much money on cars when he was young. Expenses can change over time, cars are not worth investing this much of your income into.
Consider saving some of your cash if you've no expenses - I guarantee you won't regret it down the road.
Best of luck either way
Str8WiteMale@reddit (OP)
Have always been putting safety money into investments. Don’t worry, I’m financially responsible with surplus even if this post doesn’t seem like it
o0Spoonman0o@reddit
Glad to hear it. Just trying to help a fella avoid some of my young mistakes. Sounds like you're on a better path
Hot-Gap-7553@reddit
that’s exactly why they want more down. it’s insane you’d spend your yearly salary on a car, it should be like 25% of your salary and less than 10% of your paycheck… you have no business buying a 52k car.
Str8WiteMale@reddit (OP)
I have no expenses and they’re aware of that. I offered to pay it off within 2 years. They offered me 5 years instead
nousernamesleft199@reddit
53k for a CR-V?
Str8WiteMale@reddit (OP)
Canada baby!
nousernamesleft199@reddit
well fwiw you probably shouldn't buy a car for more than what you make in a year.
Str8WiteMale@reddit (OP)
Job is a temp non full-time. In May-ish it will become a full-time job with a significant raise to roughly 70k/year
Raalf@reddit
That's even WORSE than a full time at 50k.
Raalf@reddit
That's why, then. You're trying to buy a car that's about as much as you gross in a year - it's way more risk than a bank is willing to accept.
The bank is betting you will fall behind if anything happens to your job and they want to make sure you won't have negative equity from the start.
Golf-Guns@reddit
You don't make enough money to be buying that car. Credit be damned, that's why they want more money.
Str8WiteMale@reddit (OP)
They’re aware I don’t have monthly expenses. Offered to pay it off in 2 years. Banking limits be damned I could pay off more than half the vehicle immediately
Golf-Guns@reddit
Ok then big money, put the 7k down. Generally most people buying a 50k vehicle have a trade worth a little or a down payment. 10% is kinda the minimum here.
I don't do a ton of financing but I would say generally declaring 'i don't have monthly expenses' doesn't automatically jump you into another category where they just start throwing money at you. Not having other debt will. But there's an income - debt equation that qualifies you and it assumes everyone has or could have some bills. Someone is funding those monthly expenses. That could dry up. Have them co-sign for you and I'm sure you'll get approved.
Str8WiteMale@reddit (OP)
Could try a co-signer. I’m not concerned for the 7k down other than that’s double the companies maximum downpayment for that credit score and that 7k would require multiple methods of payment due to banking limitations.
I bank with Tangerine which are a branchless banking company partner with Scotia bank and the nearest one is over 2hrs away if I was looking for a cashiers check
Golf-Guns@reddit
Put it on a credit card and pay it off? I've done this before. We were at the end of negotiations and I get points for a down payment and for whatever reason they don't seem to care about the processing fee.
I'm not trying to be a dick, but 7k is not a lot of money. If you can't get quick easy access to it, you really need to reevaluate your financial strategy.
I have branchless banking where I keep my savings and do a good bit of transactions out of. I also have a larger national bank and a credit union account. 2 days max and I can get all my funds moved to any of them. I'm assuming there's instant ways for a little fee.
Str8WiteMale@reddit (OP)
Well that’s what I was thinking, 5k on credit card and 2k on debit card but the people were asking cash. Now I don’t know if they mean literal cash or just a non-credit method such as a cheque. Would never feel good carrying $7k in literal cash.
Could ask bank for a 1-time increase to my debit limit but idk how long i’ll be on the damn call line.
Ayyy-yo@reddit
You’ll never a draft not cash. Dealer won’t take 7k in cash
right415@reddit
I might ask this in a personal finance subreddit. Do you have proof of employment and sufficient liquid assets? Not really sure what dealerships want these days as I mostly own old jalopies or pay cash. I know that they look for that stuff when buying houses.
Str8WiteMale@reddit (OP)
Yeah they went through all that and asked for a pay stub
right415@reddit
Did it look as good as your credit?
Str8WiteMale@reddit (OP)
No monthly expenses, a job for 5 years, and a savings that could immediately pay over half the cost immediately should banking limits be waved.
Don’t get a credit like that by buying coffee
SnooHabits9364@reddit
I HIGLY advise you to go through a credit union or your own bank.
Safe_Sundae_8869@reddit
Indeed. Last time I bought a car on finance, vw offered 8% chase was like 2.9%.
JustAGamblerr@reddit
Do you have a trade in with negative equity?? If so the bank is probably requiring you to cover that negative equity
Sweet_Speech_9054@reddit
It could be a credit history issue or the value of the vehicle is less than you think. If you’re not trading in they want enough down payment to keep you from being upside down as soon as you leave the lot.
Str8WiteMale@reddit (OP)
They are aware that I have a trade in vehicle
Sweet_Speech_9054@reddit
Maybe the down payment is supposed to include the trade in value.
Sudden-Yogurt6230@reddit
1st, never go into a dealer without a pre-approval in hand from a credit union or another lender that you are willing to go with. It takes all the finance crap games they want to play away. I always have an approval check with me from a credit union. I will tell them up front Im pre approved at x.x% and if they can beat it I'll use their bank. They always do.
Next with your credit score I doubt you would need to put that much down. That's the advantage of pre-approval, you walk in knowing how much you spend already with no money down. Credit union will apporve say $35k and you have a check that can be used for up to that amount. If out the door is price 35 or less you can finance the entire amount.
CHLarkin@reddit
Sounds like someone is trying to play games with you. Get a loan from your bank and find another dealer.